Owning versus renting? What makes the most sense?
Written by Matthew Cooney
It is said that homeownership is part of the American dream. While that may be true, every person has unique circumstances in life so there is definitely not one size fits all when it comes to owning versus renting. It’s worth exploring the advantages and disadvantages of both to determine what makes the most sense for you. Some of the considerations are income, geography and family status.
First, let’s take a look at renting. As a young, single person living in a big city, the allure of renting is tempting and in many cases, a necessity. Having a lease provides flexibility. Often young people will rent their first home with some friends because it is all that their budget allows. It is also easier to move to another neighborhood or city if you rent rather than having to put your house up for sale. Renting is also a good option for people who struggle with job stability or low income. Experiencing maintenance issues with a house can be a challenge if you are living paycheck to paycheck. Also not having consistent income can be a challenge when applying for a mortgage loan. That said, there are many loan products and its worth having a conversation with a mortgage professional to see what is available.
On the other hand, owning a home offers many financial advantages. To start with, it is a great way to build equity. Paying a 30-year loan may seem like an eternity, however there are many older people who own their home free and clear. The comfort they have is knowing that as long as they pay their taxes and take care of basic maintenance, they will always have a place to live. There are also many great tax advantages to owning a home which include being able to deduct the mortgage interest. Check out: Mortgage Interest Deduction and the Tax Advantages of Owning a Home.
Homeownership brings stability to the home owner. If you have a fixed rate mortgage, you will always know what your payments will be and you will never be subject to a “rent hike”. In times of inflation, this can mean a significant difference to how much money you have to pay out each month for living expenses. Also if you have a family with children in the local school system, knowing that you are able to stay in the same house and send your children to the same school can provide peace of mind.
At the end of the day, you have to consider your own personal circumstances in deciding whether to own or rent. It makes a lot of sense from a financial perspective to buy but there are reasons that renting may be the best option in your present situation. Speaking with a mortgage professional and Realtor© should be explored so you have the best information to make that decision.
Looking to buy your first home? Check out: The 12 steps to homeownership – a practical guide for first-time home buyers
For more information, or if you need a referral for a knowledgeable Realtor© in your area, contact:
Coldwell Banker Residential Brokerage
211 South Street
Morristown, NJ 07960
(O) 973-267-8990 x153