Purchasing a home in this day and age is a big step in life and there are many things to consider. Renting vs. owning is often the big first debate and what advantages go with either decision. When it comes to cost-effectiveness there are a few things to consider. For example, what is your budget? It’s important to know how much you are willing to spend, or how much you can spend. What is your timeline? Are you looking for something short-term, or something more permanent? Buying a home may seem daunting at first but could end up saving you money in the long run. Renting a home can generate fewer expenses, but can also be more costly depending on the length of the lease and the opportunity in the surrounding market. At Blue Sky, we believe that buying a home should be accessible for all people and we make it easy to get started. If you’re pondering whether or not to buy or rent, we have assembled some key advantages and disadvantages to help you decide what is more cost-effective in the long run.
Advantages of Renting a Home
One of the most sought out advantages of renting is the responsibility of caring for the home lies primarily with the landlord. For a flat rate, you have repairs, lawncare and often city services taken care of. Rent cost tends to encompass most of the expenses of living on the property and can be more affordable on a month to month basis. The safety deposit is also almost always refundable when you move, assuming you didn’t destroy the house while living there. Renting also saves you from any potential real estate taxes, and you don’t have to worry about your home’s value depreciating considering when you’re done, you’re done! Another advantage is the ability to move at a moment’s notice. You don’t have to spend the time listing or selling your home, which gives you more freedom to move as you please.
Disadvantages of Renting a Home
Of course with every advantage comes a disadvantage. As a renter, you give up a lot of freedom on what you can actually do with your home. While you don’t have to worry about most maintenance costs, you’ll have a much harder time making your own improvements to suit your lifestyle. You’ll have to “OK” any home improvement projects with the landlord, which is another roadblock on the path to personalizing your space. There is also the possibility that your rent may increase due to higher demand in the housing market. Most contracts are written with the ability to change your rates at the end of or renewal of your lease. As a renter, you don’t get any tax benefits that many homeowners receive, like tax breaks or returns. Another problem with renting is you don’t get to improve your credit score nearly as much as you would if you were to buy a home. If you plan on staying somewhere long term, the cost of rent may end up actually costing you more than a mortgage would. So if you’re looking to settle down, buying may be your best option.
Disadvantages of Owning a Home
While we’re on the topic of disadvantages let’s look at some involved with buying a home. You will inevitably have to do maintenance and repairs which can add up but almost always increase the value of the home. There are many different mortgage loan programs available and depending on your financial situation, which may seem daunting, but having a good lender will help you sort through all of them. While you do receive certain tax breaks, you also have to pay a property tax as a homeowner. Property tax is an ad valorem tax that is usually calculated by your local government depending on the location of your home and paid for by the homeowner. These taxes can vary which may limit what house you can buy so again, having a good lender who offers low rates allows for some wiggle room. Many of these seem like disadvantages but with a knowledgeable lender, you may find that buying the right home will ultimately lead to more financial freedom.
Advantages of Owning a Home
We may be biased but we believe that the best bang for your financial buck is buying a home. Large purchases can be difficult to navigate but that’s why going with Blue Sky gives you an advantage- we’re here for you. With a fixed mortgage rate you have a steady monthly payment that won’t fluctuate over time. As a homeowner you receive tax benefits and it’s a great tool to boost your credit. Another aspect of being a homeowner is the freedom of living in a space you can call yours. Whatever vision you have for your home is yours to make a reality – create your own blue skies! The more work you put into your home the more you get back. We often see increases in the value of homes and home equity with remodels, especially in a location that is growing or sought after. Purchasing a home is a terrific investment if you pay attention to the market and find a great neighborhood. Close proximity to schools, parks, and businesses is something to consider when buying a home or starting a family. If you’re looking to get comfortable and stay awhile, buying a home will almost always be your best option.
There is no better way to learn more than by reaching out. Renting vs. owning is always a great so we’ve made it easier with our loan calculator[link] and online applications[link]! At Blue Sky, we believe in creating a great experience for our customers and are always available to answer any questions. Our goal is to get you into your dream home and know the process and the people to do it. If you’re ready to make a smart investment, then simply fill out our online pre-qualification[Link] and we’ll get you started on your path to home ownership!