Buying a home is a big financial decision, and it’s sometimes difficult to know if you’re making the right choice. There has been much debate and many diverging schools of thought when it comes to renting vs buying a home, with both options offering a multitude of pros and cons. We here at Fifth&Hazel have taken five most commonly lauded advantages for why buying a house is better than renting, and have broken them down to help you understand when buying a house is better than renting. Before reading on, however, it’s important to do your research and look into the pros and cons of each, weigh them against your current financial and personal situation, and make an informed decision that is right for you.
Renting is commonly thought of as “throwing money away”, and while this is far from accurate, the money that you spend on rent does not go towards anything bigger than covering the cost of your living situation. When you make mortgage payments, however, each payment goes towards owning your home outright, as well as towards building credit. If the housing market in your area appreciates, you are increasing your net worth by paying for the house at its previously lower value. Unfortunately, however, this can go both ways. If the housing market in your area stagnates or drops, you may find yourself paying more for the house than it is actually worth or losing money in the long run due to inflation.
It may be hard to see it when your mortgage is spread out over thirty years, but your money is not only going towards increasing your equity, it is also going towards drastically lowering your living expenses one day. When your home is paid off, the biggest chunk of your living expenses is off the table, and all you have to worry about is upkeep and maintenance of your home, property taxes, and insurance. You no longer have to pay lenders insurance or make monthly mortgage payments, thereby significantly reducing your monthly expenses.
For many, the emotional appeal of homeownership is priceless. Financial considerations aside, homeownership offers a true sense of feeling at home. You can personalize your home to your preferences, whether it be painting a wall or adding a bathroom, and tailor it exactly to your needs and tastes. Furthermore, homeownership offers a sense of stability that you aren’t able to get with renting. Your home is yours, nobody can raise your rent or choose not to renew your lease, and you’ll never find yourself suddenly dealing with another landlord if the property is sold to a new owner.
Your home is an asset, and can bring you passive income if you choose to rent it out. Many people rent out properties and use the income from the rent towards paying the mortgage on the property. Others rent the property out after it has been paid off as a method of steady passive income. This can allow for similar flexibility to renting and contribute to your monthly income, but you’ll still be on the hook for property upkeep. For many homeowners, renting out their home is a happy medium between the benefits of owning a home and the freedom and flexibility of renting.