Owning a home is often touted as the American Dream. But the truth is: Homeownership isn’t always rainbows and butterflies. For some, renting may actually be a better option. So before you venture too far down the homebuying path, first take some time to decide whether or not homeownership is right for you.
Here are some things to consider:
General guidelines dictate that homebuyers should stay in their home for at least four or five years to break even on closing costs and other fees. For those who appreciate flexibility or plan to relocate within the next few years, renting is likely the smarter choice.
Renters do not receive any tax breaks related to their apartment, but homeowners are able to deduct at least a portion of their mortgage interest.
When you own a home, you are free to make whatever changes you wish (barring any exceptions from a homeowner association). Such freedoms do not exist for most renters. In addition, homeowners don’t have to seek permission from a landlord if they wish to add a pet to their family.
Homeowners should be prepared to pay a down payment, closing costs and other fees when purchasing a home. For renters, the up-front costs are much lower – usually only consisting of a security deposit that might amount to one or two times the monthly rent charge.
Homeowners have the opportunity to build equity in their purchase – a huge benefit when it comes time to sell or if they wish to take advantage of a home equity loan. Renters, on the other hand, will not get back any of the money they pay for the use of their apartment.
Leaky roof? Failing HVAC system? Broken water heater? As a homeowner, these are your problems – not a landlord’s (although a home warranty could help you cover some of these costs). If you don’t feel capable of handling these potential situations or simply wish to avoid regular upkeep such as yardwork, an apartment is probably for you.