Renting vs. Buying – Understand the Pros and Cons
Deciding to buy a home can be a practical and gratifying decision, as long as the choice is made with a clear understanding of the benefits and responsibilities of homeownership. There are pros and cons associated with owning a home, just as there are with renting a property.
The following are some things to consider when contemplating joining the ranks of homeowners:
Tax Deduction – One of the primary advantages of buying a home is the mortgage interest deduction. This is a tax benefit that allows a homeowner to deduct mortgage interest from their personal taxable income. Rental payments do not offer this advantage.
Appreciation – Owning a home is an investment with a tangible asset that can appreciate in value over time. When renting, the money paid to the landlord is contributing to their ownership of the property.
Length of Stay – Renting is almost always the best decision if the time in a location is going to be a year or less. Investing in loan charges, the down payment, appraisal fees, and closing costs to simply turn around and leave a year later, doesn’t pencil out. This is where online financial calculators are a great tool to use to help make the decision. If staying in a location is the goal, then there are significant advantages to homeownership. For financial pros and cons, there are online tools to help you compare the cost of renting based on length of stay in an area.
Freezing Monthly Payments – A tangible advantage of buying over renting is that mortgage costs on a fixed-price mortgage stay the same. Rental costs are notorious for going up over time.
Individuality – Renters are limited with regard to what changes they can make to the property. Homeowners, on the other hand, have control over many aesthetic aspects—from paint color to landscaping to adding a lanai. In short, a homeowner can individualize their surroundings much more than a renter can.
Stability – Sometimes things can happen that force renters to have to move out, like the landlord decides to sell the property, raise the rent, or not renew the lease. With homeownership, there’s a sense of permanence—well, as long as mortgage payments are made.
Maintenance – This is both a pro and a con. A homeowner, unlike a renter that relies on a landlord, is responsible for all maintenance. The con is that there is a cost for making the repair; the pro is that the homeowner can get it done when they want to rather than having to wait for when it suits the landlord. It’s generally possible to buy a warranty when purchasing a home to help cover these costs for a period of time.
The key to making the decision to become a homeowner is to be prepared. Start saving money for a down payment, find a good real estate agent, and get preapproved for a loan to determine your target price range.
If you are interested in learning more about renting versus buying a home, real estate agent Angela Pohakuola Studer, of Coldwell Banker Pacific Properties, is hosting a free information session January 27, from 2:30 to 4:30 p.m., at Coldwell Banker Pacific Properties, located at 4460 Kapolei Parkway, Suite 310, in Kapolei. The presenter will be Jodie Tanga (NMLS 277336), director of business development at Pacific Rim Mortgage, who will discuss the pros and cons of buying versus renting and answer any questions.
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If you are looking to purchase or sell a home, contact Angela Pohakuola Studer (RA) RS-79822, of Coldwell Banker Pacific Properties (4460 Kapolei Pkwy., Ste. 310, Kapolei), at 808-551-0900 or Angela.Pohakuola@cbPacific.com. For more information, visit AngelaPohakuola.cbInTouch.com.
©2015 Coldwell Banker Pacific Properties. All rights reserved. Coldwell Banker Pacific Properties fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Operated by a subsidiary of NRT LLC. Coldwell Banker and the Coldwell Banker logo are registered service marks owned by Coldwell Banker Real Estate LLC. Real estate agents affiliated with Coldwell Banker Pacific Properties are independent contractor sales associates and are not employees of Coldwell Banker Real Estate LLC, Coldwell Banker Residential Brokerage or NRT LLC.Edit ModuleShow Tags