Many individuals begin their independent lives by renting a house. As the working class builds their careers and saves money, starting a family becomes the next priority and many choose to buy a home later on. The decision to choose between buying a home or renting one is a daunting task and this decision can make a huge difference on your financial well-being. Both have their ups and downs and the decision to buy or rent must be based on the financial situation and long-term goals of an individual.
What does it mean to buy a house?
The sense of pride when you are an owner of a house is something undeniably larger than life. The feeling of freedom and stability in owning a house is an unmatched sense of security that renting could ever provide.
Now let’s see how the emotional plus points could be translated into financial advantage if you decide to live in the house or sell to a potential buyer.
The financial forte of buying a house is a strong probability of real estate eventually appreciating which translates to a reasonably big return when an owner decides to sell the home. Secondly, the tax benefits for an owner lead to substantial savings.
On the flip side, buying a home isn’t everyone`s cup of tea. The foremost disadvantage is the heavy upfront cost. Besides the down payment the property taxes, owner’s insurance and let’s not forget maintenance and repairs are the owners’ responsibility. These extra spending can’t be carried out without substantial savings. If a buyer or a potential owner is prone to constant relocations or is not sure about his or her long-term living scenario being an owner of the house becomes a burden.
Lastly, but importantly if the value of the real estate nose dives for unforeseeable reasons it’s the owner who will incur a huge loss, not the renter.
So, does the renter of a house have an edge?
Renting a house is an anticipated financial expense. You know what cost is going out of pocket and can plan accordingly. Real estate values vary in response to changing economic conditions and can decrease over time. If you’re a renter, that’s not your concern – it’s your owner’s.
It’s not all hunky-dory for the renters of the house. The monthly rent payments land in the owner’s account, not the renter’s, and end of the day there is no tangible asset to own for all the rent paid. To make matters worse the rent can go up anytime which impacts financial stability. The hard reality of life is that renting in the long run gives no financial edge to the renter.
Is it safe to say homeownership is the best option?
Buying a house is a very good investment. It is prudent to note that no investments come risk-free. Therefore, the onus is on the buyer of the house to do the homework and needs careful deliberation on the pros and cons of buying a house with respect to personal financial appetite and life goals before venturing into real estate.
Our culture romanticizes house ownership to a large degree, so the emotional and social pressures shouldn`t affect decision-making. It is never a bad idea to consult a financial advisor before coming to a conclusion.
So, what’s the final ruling in the house ownership discussion? As someone who’s maneuvered this decision, I’ve come to the conclusion that there is no all-round and all-purpose solution. The decision to buy or rent a house should be entirely personal and rooted in your individual financial circumstances and long-term objectives. Consider your financial stability, and short-mid-long-term life goals, and give importance to budgeting, and lifestyle. Look into the local real estate market and consider the advantages and disadvantages carefully.
After all a home is a house, but it could be anywhere. What matters the most is your home should be a place where you feel cozy, safe, and financially stable. It doesn`t matter much if you choose to buy or rent, it’s the sense of belonging and happiness that truly counts. Therefore, before you make your choice, take your time to picture the life you want to live and decide the course that takes you there.