In this ever-changing real estate market, the decision to rent or buy a home can be as confusing as ever. Remote work, rent increases, climbing mortgage rates, and changing lifestyles are all now aspects to be considered when making this critical decision. But ultimately, which is better: buying a home or renting a home? Keep reading to find out more!
- Buying a home vs. renting: things to consider
- Benefits of buying a home over renting one
- Exploring renting and buying a home
Buying a Home vs. Renting: Things to Consider
When it comes to the most significant touchpoints for deciding to rent or buy a home, here are a few aspects you should think about:
Rising mortgage rates will typically affect your ability to buy a home, as well as the required down payment. But other financial aspects to consider when buying a home include property maintenance or upkeep costs. When you buy a home, you’re responsible for everything. You should budget for the mortgage payments as well as other costs to cover lawn maintenance, garbage removal, property taxes, roof replacements, storm damage, and more. When you’re renting a home, you can eliminate most (if not all) of these costs.
How Long Your Plan to Stay
Buying a house is typically an excellent idea if you’re planning to stay put for at least three years. With home values increasing by 4-7.5% per year (according to Realtor.com), you may pay more in closing costs than you’d earn in proceeds if you sell your home after a year or two. Moreover, you might owe capital gains tax if you sell the house you’ve owned for less than two years. However, for people who aren’t sure they’ll stay in one spot for more than three years, such as students or people who want to try new neighborhoods, renting makes more sense than buying a home.
Customization and Personalization
One of the largest differences to consider between buying a home and renting is the ability to make the space your own. When you buy a home, you can do anything from updating appliances to a complete house renovation. However, renters, in most cases, are limited in terms of changes. Most renters are only able to paint and have to return the place to its original condition and color scheme when moving out. So, if you have a strong desire to customize your home to your preferences, then you more than likely need to buy a home.
Buying a house is likely one of the largest single purchases you’ll make in your lifetime. As such, there are several aspects to consider when making such a huge investment, from location, and market to ongoing costs. But keep in mind that owning a home isn’t solely a financial decision. And if this is the place where you want to settle down, set down roots, or raise your children, then you shouldn’t worry about timing the market perfectly. If you can see yourself being happy and comfortable for years to come, the profit you make on the sale sometime down the road becomes less important.
On the other hand, renting can be an excellent option if you’re unsure about the location, want more flexibility, or simply don’t have enough time or money to invest in homeownership and all its associated costs involved.
Benefits of Buying a Home Over Renting One
Homeownership brings tangible and intangible benefits. Not only do you have your own house, you can make decisions about the design and look of the space, but you also get pride of ownership and a sense of stability. That said, here are more benefits of buying a home over renting one:
- Tax Benefits: When you buy a home, you may benefit from certain tax benefits. The home mortgage interest deduction often reduces any out-of-pocket expenses during your loan’s early life, as long as deductions are itemized.
- Build Equity: Buying a home, especially to live in, shouldn’t be viewed strictly as an investment. But homeowners can capitalize on the equity (the home’s value minus what you owe on the home) that accumulates over time. Typically, you’ll build equity as you make monthly payments and lower your outstanding mortgage balance over time. Moreover, if your home value goes up, you can earn more during resale.
- Greater Housing Security: If you’ve ever had a landlord notify you that your lease won’t be renewed or they’ve decided to sell the house to a new owner, you understand how scary it can be. But if you buy a home, you make the decisions about how long you’ll live there as well as when it’s the right time to relocate to a new area.
Exploring Renting and Buying
Sometimes, you don’t have to pick one option between renting vs. buying a home. If you’re financially ready to buy a house but aren’t ready to give up the renter lifestyle and flexibility, you can consider buying a home and continuing to rent where you are. You can also decide to invest in a home to rent it out, creating a different income stream while building equity in a property. In fact, buying a home to rent it out may offer a much better return on investment (ROI) than simply buying a house to live in.
Need Help Buying a Home in Tampa? Call Us!
Ultimately, deciding between buying a home and renting is a personal choice that affects your financial health and lifestyle. And if you haven’t determined which is best for you, it’s paramount to speak with our real estate agents who’ll help you weigh your options and make an informed decision. Call us for more information or if you have any questions about renting or buying a home!