Due to the heavy upfront costs involved when buying a house, many young people are opting to rent a house as they start their independent lives. However, as they strive to build their professions, save a portion of their income and start families, many find it wise to buy their own homes. On the contrary, homeowners approaching retirement may decide to sell their homes and become tenants again.
However, making a decision to buy or rent a home is an individual preference which calls for careful evaluation of various factors involved. So before you make that step, ask yourself these questions; Is it financially viable? Can you afford it without compromising on your budget? Do you have the expertise needed in maintaining a home? Are you emotionally prepared for the responsibilities that come with each?
This is because for instance, a personal home requires regular renovation and care and you need the hand on skills to avoid unnecessary expenses to hire repair expert to fix some things. Also, possessing a home is a huge obligation that requires serious analysis before investing on it. Are you ready to sacrifice your weekends to tend to your garden, cleaning gutters and doing many routine chores?
Having considered above factors, you can agree with me beyond reasonable doubts that protecting your greatest venture can be satisfying but only if you are ready. However, buying or renting a home as its advantages and disadvantages that need evaluation before settling for one. At times renting may be a better choice for a home buyer and for this reason, we have summarized the important factors that one need to evaluate before making a choice, so that will not lead to regrets later.
Purchasing a home involves huge upfront costs which are paid immediately after the seller accepts the bid, however, some sellers agree to be paid at the close of the deal. These upfront costs include; down payment which is the percentage of the buying price usually paid once the transaction is finalized and it depends on the status of the buyer and the type of mortgage loan he or she qualifies for. It also consists of earnest money paid within three days after the offer is accepted by the seller, home appraisal fees, home inspection fees, property taxes and first year’s homeowner’s insurance.
On the other hand, renting a home doesn’t necessitate expensive acquisition process, but it has fewer upfront costs as compared to buying a house. However, still, there are costs one may meet before or immediately after relocating into a new apartment. Such costs entail security deposit which is always required by landholders as an insurance against destroyed property, failure to pay rent and other incidents.
Also, there are non-refundable deposits reliant on landowner’s preferences, living conditions and rental property laws. Also, there are moving and the first month’s rent costs to be incurred by the tenant to be. When relocating, one has to pay for the moving of properties from the former residence to the new apartment by hiring movers or leasing a truck.
Finally, almost all landlords demand the first month’s rent immediately, and even if you relocate in the middle of the month, they still require a prorated rent expense.
Also, buying a home consists of a lot of recurring costs. Some include monthly payments to the creditor while others are reimbursed separately. For instance, property taxes to the local authorities whose rates vary by location and from year to year.
Moreover, a homeowner is accountable for payment of all local and utility services on his or her property like gas, electrical, telecommunication and water services.
Similarly, maintenance and replacement costs are a responsibility of a homeowner in addition to mortgage insurance expenses. Conversely, a tenant is expected to pay monthly rent in addition to utility costs which in some dwellings in included in the monthly rent.
Having considered the above major factors that one needs to consider before renting or buying a home, you are now better placed to invest in what works for you best and will ensure the stability of your financial life.
So ensure you make the right decision. Chase your dream.
What is logic for you at this point in your life? Renting or buying?
Are you ready for the choice you are about to make?