Buying a house VS Renting. What is the right decision for you?
Buying a home in order to build equity is one of the main financial reasons prospective buyers jump into the market, but also people want the satisfaction of owning a home, adding interior touches of their own and have a home they can call their own.
Pros of Renting:
- Getting familiar with new towns and neighborhoods, by renting you can test an area without committing to it.
- Uncertainty in your career. If you might be in a different state, you may want to rent since buying ties you down to a greater extent.
- Uncertainty in your income. If expect to have a pay hike or pay cut in the near future, that change your ability to pay a mortgage.
- Poor credit score? Paying on-time rental payments can help you slowly repair your credit score to help with qualifying for a mortgage.
- No maintenance. Broken dishwasher or leaky pipes, no need personally worry about. Call your landlord to fix the issues!
- Incidental expenses- a lot of landlords pay for many utilities such as water, sewer, garbage.
Pros of Buying:
- When you are renting you don’t own anything. When you pay a mortgage, you can increase your ownership with every payment made to your loan. Also, you can borrow against your ownership (or equity) in the home to pay for major purchases, refinance your home at favorable rates, or, once you’ve paid the entire mortgage off, borrow to fund major purchases like a second home or home remodel.
- Tax deductions- you can deduct mortgage interest as well as your property taxes. Uncle Sam doesn’t give deductions to renters. Not only that, but if you meet certain requirements the IRS won’t apply a “capital gains” tax on your profits from the sale of your home. You can keep the first $250,000 in profit you make when selling the home if you’re single, or the first $500,000 if married. In addition, those who work from home may be eligible to take deductions for their home office and portions of utilities.
- Creating your house into a home. Adding creative control such as adding rooms, painting the walls pink, hammering anything into your walls, you can do it all! As far as maintenance you will be responsible to maintain your home. If you live in a community where homeowner’s association is required you may pay a monthly fee to have your maintenance work covered by the association.
Is Renting Cheaper?
It depends on your market and where you choose to live. Are you saving money by renting? Not necessarily, it depends on the situation. If you look at it from a maintenance perspective- homes cost money. Appliance’s break, roofs leak, pipes burst, and when you own a home, you are the one responsible to pay the bill. So, if you look at it from a maintenance perspective, then yes, you are saving. But owning a home has it benefits such as creating equity, 1040 tax deductions, and could end up as an investment property down the line.
Speaking with expert like a local lender in Michigan can help you get pre-qualified for buying a home to prove you’re ready to buy. There are many online affordability calculators to help you see how much you can afford. Renting or buying it is important to hire a realtor who understands your needs and wants the perfect home for you!
Rivard, Aul, and Associates-We have the fresh perspective you want and the expertise you need! 586-786-8949 Rivardaul@gmail.com