At some point in their lives, most adults will likely have to make an important decision about when to rent vs when to buy a home. Renting means that you’re living in a property that someone else owns. You usually pay a monthly fee (rent), and you can live there as long as you continue to pay. Buying a house means you’re the owner of the home you live in. You’ll make monthly mortgage payments that will eventually end once the house loan is paid off.
To Rent or to Buy?
Figuring out whether to rent or buy can be a difficult decision. Taking a look at your options and expenses can help in this decision. So which option is right for you? Let’s break down the differences between when to rent vs. when to buy.
When to Rent
Here are some of the advantages when renting a home:
- Fewer upfront costs: To move into a rented home, you’ll usually have to pay a security deposit equal to 1 and ½ months’ rent. Other than paying movers, that’s the only upfront cost you’ll have. When you buy a home, you’ll have to make a down payment, pay closing costs, and possibly renovate. That’s tens of thousands of dollars before you even move in.
- More freedom: You can decide to leave your rented home at any time. If you have a house, you’ll need to sell it before you move anywhere.
- No maintenance: When renting, you’re not responsible for any repairs or upkeep of the property. Whether you’ve got a leaky faucet or the roof needs to be replaced, it’s all the responsibility of the landlord. The landlord is responsible for landscaping and shoveling snow, too.
- No property taxes: When you own a home, your property taxes are added to your mortgage, which means extra hundreds of dollars per month. And if your taxes go up, then your monthly mortgage payment goes up, too. You don’t have to worry about any of that when you rent.
- No home value worries: When renting a home, the neighborhood property values aren’t your concern. When you purchase a home, however, you hope that it’ll one day be worth more than what you paid for it. But there’s no guarantee that’ll happen. Sometimes, your home can lose value and you can’t sell it for as much as you paid for it.
- Opportunity to build credit: Maybe you want to buy a home, but your credit history isn’t very good. If you make timely payments on a rental property that you can afford, you’ll build up a good credit history in no time.
When to Buy
Some of the advantages when buying a home include:
- Opportunity to build credit and equity: When you are paying a mortgage on time each month, you’re strengthening your credit just like with renting, but you’re also building equity. Equity is the difference between the current market value of your home and how much you owe. For example, if your home is worth $300,000 and you owe $200,000 on the mortgage, then your equity is $100,000. You can borrow against that amount to make home improvements, pay for a child’s education, or invest in something else.
- Upgrades are possible: When you rent a home, you may want to remodel the kitchen or the bathroom, but you can’t. First of all, you’re not allowed. Second of all, it doesn’t make sense to update a home you don’t own. When you own a home, you can make any improvements you like at any time and add more value to your home at the same time.
- Tax benefits: You can deduct your mortgage interest and property tax payments from your federal taxable income. There are no tax benefits when renting.
- More stability: If you find a neighborhood that you like, then purchasing a house for your family in that community provides a sense of belonging and more stability for everyone.
Figure Out The Right Decision With a Virginia Beach Real Estate Agent
If you’re on the fence about when to rent vs buy a home, carefully consider the advantages above. Think about your personality, living preferences, and financial situation and determine which option aligns best with your lifestyle.
If you have questions about when to rent vs. buy, then talk to an experienced real estate agent like Katie Zarpas. Katie prides herself on her personal, hands-on approach, and the creative style and quality of her work reflects that. Katie’s marketing, sales, and transactional expertise make her an invaluable partner and resource for any real estate client. Reach out today by phone at 757-685-4400, or by scheduling an appointment online.