With the housing market gradually recovering from its crash nearly a decade ago, many individuals and families find themselves asking the same question: Should I buy or rent?
Renting an apartment or even a house tends to be more popular with the younger generation, as it represents their first time truly living on their own. Conventional wisdom dictates that after a few years of renting, you become a homeowner and enjoy the perks of owning a piece of property.
However, certain economic conditions have made it somewhat difficult for renters to save enough money for a down payment, and they're instead stuck in a continuous cycle of having to sign a rental agreement. But renting isn't necessarily bad once you get older.
The same applies for buying a house. It has many perks, but buying a home may not be for everyone, especially those who to move around often.
With the spring homebuying season ready to kick into high gear, there are plenty of factors to consider if you're looking to buy a home.
Why you should buy
Before you jump into the housing market, it's important to know why you want to purchase a house. It is, after all, an expensive and life-changing moment and you want to make sure you're satisfied with the decision.
When to it comes to buying, you actually own the property. To some, this may not sound like a big deal, but to others, it is. You can do whatever you want - within reason - that is not typically possible when renting. After buying, you're free to build an addition, knock down some walls, replace the old appliances or do anything else you can think of to make everything your own.
Once you purchase a house, you start to build equity, which can allow you to borrow money to pay for major renovations and even refinance your home at lower and more favorable interest rates.
Financial benefits from buying
Owning a home entails some nice financial incentives. Right off the bat you're entitled to many tax breaks you otherwise wouldn't receive as a renter. Example of tax deductions you can eventually take advantage of include property taxes and mortgage interest. When it comes time to file taxes, no one will complain about having fewer obligations and greater returns.
Further benefits include steady monthly payments if you elect a fixed-rate mortgage. Most lenders will let you opt for a 15- or 30-year mortgage and as long as it's fixed, the monthly totals will not change, unlike with renting. Landlords may approach you at some point in your lease and inform you the rent will be increasing.
Another potential benefit: You can use your home to make some side income. Due to the rise in popularity of services that allow you to rent out rooms or even your whole house, you can sign up and make some money on the side whenever you are out of town.
"Owning a home entails some nice financial incentives."
In many ways, a house represents one of the strongest and most significant investments you will ever make in your life.
Get to know the neighborhood
Finally, buying a home will result in your settling into an established community. You no longer have to worry about where you will live once the lease is up, nor do you have to worry about loud neighbors upstairs.
Once you move into a neighborhood, you and your family can get involved by volunteering, joining the local school council or simply by holding regular get-togethers.
Benefits of renting
According to Money Crashers, you should expect to live in a home for a minimum of five to seven years. These years are important to take into consideration because you will undoubtedly develop an emotional attachment, as will the rest of your family.
Therefore, if you can't see yourself living in the same city, let alone same neighborhood, for an extended period of time, buying a home is maybe not a smart investment. Renting is an ideal solution if there is uncertainty in your career or income because you can easily pack up and find a new place to leave, stated Zillow.
Financially, rent may be cheaper than a monthly mortgage, depending on where you live and the type of apartment you're renting. Having a roommate or two can be a good method for lowering your renting costs.
Additionally, you don't have to worry about maintenance costs, because that is the landlord's job.
The choice is yours
Ultimately, it's your choice to decide whether you want to buy or rent. Both have benefits that have to be weighed so you can arrive at the right choice. The sooner you make a decision, the faster you can start looking for a new place to live this spring - something that plenty of other people will be doing.
You can also utilize online calculators that can help you determine which decision makes more sense financially.
For more information about smart ways to manage your finances, contact Landmark Bank.
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