The decision to move into a place of your own is a big one, and deciding whether to rent or buy that first home can make things complicated. Prices in both markets can be vastly different depending on where you want to live. Additionally, you have to ask yourself a series of questions. What can I afford? How long will I be staying? What about homeowners or renters insurance. Both renting and buying have advantages and disadvantages, so this post will take you through them as we look at renting vs buying your first home.
Most people, if they had the proper resources and credit, would likely purchase rather than rent. Buying a home means being able to make adjustments, improvements, or whatever it is you desire to the home because it’s yours. On top of that, homeowners have the ability to then sell that home, or convert it to a rental. Either way, a homeowner has a lot of decision making power when it comes to their home. Of course with great power comes great responsibility
Since you own this property, you are responsible for the utilities, maintenance, and for paying taxes on the property. Before you even buy the home a large downpayment equal to 3%-20% of the home’s value, plus a monthly mortgage. Additionally, there is no guarantee you homes market value will increase, meaning you may end up selling for less than you bought. This often leads people to rent their first home.
Renter’s can breathe easy knowing they do not usually have too many upfront costs, mortgages to pay, or major repairs to deal with. The landlord usually takes care of maintenance issues, and some may cover utilities as well, putting the tenant in a spot to save money. Additionally, surrounding home market values going down is not a factor for you.
Of course, when you rent, you usually sign a year lease, with some being longer and some month -month. One of the most attractive feature when people are deciding rent vs buy. Renting is great for those who are not sure they want to stay in a certain area, state, or even country because there is no long term commitment.
Since you are renting your home, you do not own the property, meaning the landlord has decision making power. Landlords can raise rent to a price of their choosing, or put the home up for sale, all without consulting you. This means you may be stuck in a short market, meaning there are not many rentals available. Fewer rentals on the market is a bad sign for renters looking to move.
Take Home Message
At the end of the day, the decision to rent or buy your first home comes down to your needs and what you can realistically afford. As mentioned before, they both have advantages and disadvantages. If you aren’t sure you’ll want to stay in the same area for a long period of time, then renting is for you. On the other hand, if you feel good about where you’re at; can afford the down-payment, then buying is the right decision.