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The Advantages and Disadvantages of Buying or Renting a Home

June 3, 2016

Buying a home is a important decision that everyone must do. But what do one do if they can't buy a home right now? Maybe renting a home is an option. Either way,  each option has their pros and cons. Here are just a few of them. Sources: here & here   Advantages of Buying: 

1. The cost of owning a home can be less than the cost of renting.
2. The buyer has “forced” savings, which can be important when the buyer pays down the balance by a substantial amount.
3. The buyer experiences tax advantages. Property taxes and interest can be itemized for tax deductions.
4. The buyer controls the property. They have the freedom to change the home as much as they want.
5. There are a fewer rules that the home buyer must abide by, which includes restrictions as far as pets, children, and noise goes.
6. When mortgage payments are made on time, the homeowner can achieve a better credit rating
7. Greater privacy.
8. Homes typically increase in value, build equity and provide a nest egg for the future.
9. Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.
10. There’s pride in home ownership.

Disadvantages of Buying: 

1. Home ownership is a long-term financial commitment.
2. You’re responsible for all maintenance on your home.  No landlord to depend on.
3. Owning a home ties you to your community, making it more difficult to suddenly pick up and leave a location.
4. Although mortgage payments are usually fixed, they’re generally higher than rent payments.
5. Buying a home requires a down payment, closing costs and moving expenses.
6. The value of your house may not increase – especially during the first few years.
7. Borrowing against your home equity, to help you with a debt consolidation, for example, can leave you ‘house poor’

Advantages of Renting: 

1. The initial investment to rent a home or apartment can be quite low.
2.  Renting a home can be cheaper than buying a home. The funds that would normally be used can be invested into savings accounts.
3. Your landlord is responsible for performing nearly all maintenance and repair work on the property.
4. The renter has less of a tax impact on their financial situation and is not impacted by such items as property taxes that can fluctuate often.
5. The renter may be able to budget easier. Rent is an amount that is fixed and may even include utilities in the rental amount.
6. The renter has more mobility and flexibility to move since leases tend to me short-term. Most leases are for 12 months. So, if your job requires you to move frequently, renting can be a desirable alternative to owning.
7. Insurance costs are lower for renters because the renter only needs to insure the contents of the rental property and not the structure itself.

Disadvantages of Renting:

1. You won’t be able to claim any deduction for mortgage interest and property taxes when you file your tax returns.
2. Your housing costs aren’t fixed like they are with a fixed-rate mortgage. Your rent will most likely grow from year to year.

  If you're ready to buy a home and live in the Memphis,TN/North Mississippi area then let Grant & Co. Builders · Realtors be your home builder. We've been building and selling new homes for over 70 years! Give us a call at (901) 854-0525 or visit us at grantnewhomes.com. Grant & Co.: A Tradition of Quality You Can Take for Granted