Renting versus buying a home is a decision most have to make at some point during their life time. Below are some comparisons and differences:
Benefits of Renting a Home
Generally accepted benefits of renting a home include a much cheaper monthly rent payment than a mortgage payment, shorter-term lease options, and not having to worry about making repairs to the home or appliances. Typically, in order to rent a home, a prospective renter must sign a lease, or contract in which the renter and land lord agree on certain ground rules, including when rent payment is due and whether pets are allowed. In order to move into a rental home, usually the first month’s rent and a security deposit is required. The security deposit is often the same price as a month’s rent.
Renting a home usually includes a one-year lease, meaning a person has signed a contract in which he or she agrees to remain in the home and pay rent for a specified amount of time, usually one year. Once the lease is up, provided the renter does not sign a new lease, she or he is free to move to another home.
Typically, in rental situations, the renter does not have to make repairs to the home or major appliances and is not expected to pay for them. If something breaks, whether a dishwasher or a window, the land lord will take care of it.
Benefits of Buying a Home
Pride of ownership, appreciating value, and the stability of regular monthly payments are some of the things which drive many to buy a home. Not only does the home owner own the home, but he or she can do whatever they wish in the home, from repainting to gutting the kitchen to growing a garden outside, if an outdoor area is included with the home.
Regular mortgage payments, provided they are affordable, can provide financial stability for home owners who may have experienced issues with rent prices rising unexpectedly in the past. Home equity can give home owners peace of mind in times of stock market crisis.
Renting Versus Buying a Home
While renting or buying a home may both have separate benefits, it is important to compare benefits and negatives of both in order to make an informed decision.
While renting a home provides a cheaper housing payment every month compared to buying, long-term renters can attest to the fact that the monthly rent payment can go up from time to time. If a home owner has a traditional loan, the home owner’s monthly mortgage payment will not go up in price.
Applying for a mortgage includes a lot of paperwork. Prospective buyers must pay close, careful attention to every detail of the mortgage contract. One reason for defaulting on a mortgage is the mortgage holder did not fully understand the contract and did not realize, for example, that the monthly mortgage payment may go up at some point. A rental lease is typically less than five pages long and includes easy to understand.
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