To Rent or To Buy a Home, that is the Question!
How does a person decide to rent a home/apartment or to purchase a house? What advantages and disadvantages are there to owning a home compared to taking the cheaper route by paying monthly for an apartment or leasing a home? When is a person ready to purchase? Is my credit good enough for a mortgage loan? Do real estate brokers have my best interest or are they just earning their paycheck? These are among many other questions that most people often ask when it comes to home buying. However this topic is hard to determine the answer and can still be undecided after hearing an answer. After researching these topics dealing with real estate, I have come up with some information to determine which choice could possibly be better and hope that it will be a great help to anybody that reads this!
As of right now, I am currently renting out an apartment. This is due to my circumstances of being raised in Houston, Texas but moving to Arlington Texas to pursue my education. Hoping one day to graduate and find a good paying and secure job in the future. Because of where and how I live, I often question myself if I should continue renting or to step it up and purchase a house. Since there has always been rumors about apartments and leasing homes are considered throwing your money away. Given that the economy nowadays is worse than before, there have been many claims of falling house prices, historically low interest rates, and tax credits that are encouraging renters to become homeowners. According to Bruce Norris, “there are still going to have a tremendous amount of foreclosures, price declines, and best opportunities to buy properties at amazing prices”, after reading this statement, many people become more interested in obtaining a house. But the real question is “if that is a good idea?” or are statements like this; tricks to suck people into blowing off their money by buying houses that they can afford, but isn’t a necessity. With even more encouragement from Bruce stating “the affordability has never been this high.” announcements like this can trap people by continuingly pushing them to consider acquiring a house, instead of saving for their family’s future, if not their own.
Although the economy for purchasing houses is great, there can also be a negative side to this impact as well. For example, if the economy is doing so bad than doesn’t that mean many organizations and businesses are loosing money as well? This can result too many layoffs and termination of jobs. How does a person that can afford a house at present time know if they can afford it in the near future? Without knowing if one has the job security to remain with their company for at least five or more years, one can reconsider about purchasing a house. Many people feel that renting can be a huge benefit compared to buying a home since it can be cheaper. But just because there are great interest rates for mortgage loans nowadays, it doesn’t mean that everybody and anybody will be able to obtain these rates. Bad credit can affect a person’s rate majorly, which in the end can give many people high interest rates still. Another benefit from renting is how easy it is to terminate a lease, in a case of relocating jobs or being laid off. But most of all, the greatest factor to renting is based on if the right home or apartment complex has been chosen, which can save a lot of money by not only paying cheaper monthly payments but one can continue to save money every month too. Choices like determining if it really is a good idea to live in luxury now, and possibly encounter troubles later; or to continue renting and saving money while focusing on a more luxury life in the future can be a huge risk.
After analyzing the economy and figuring out if one has enough job security with a stable income that flows through their pockets constantly. The next topic to consider about home owning are the advantages and disadvantages between renting and owning. A couple of advantages for renting is that there are fixed costs for the term of lease, as well as no risk when it comes to equity. There is a smaller down payment for renting compared to buying, and there are less maintenance cost and more ease when it comes to relocating. Like everything else, when there is a good to something it will have a bad as well, which are no tax gains, not being able to personalize or modify the rented quarters, and no gain whatsoever on equity. Advantages for buying a house are that the mortgage balance will eventually decrease while equity increases; you can modify the home with unlimited ideas, and if done correctly one can receive a huge tax return from home ownership. While this sounds like a awesome idea to buy, some disadvantages are that most home buyers will need to put down a larger down payment, and maintenance if any can be costly and is provided by the owner. Another huge disadvantage is moving; most people that need to move for any particular reason will most likely need to sell the current home before moving which can result to a loss of time, more work, and more money to sell the house.
In conclusion, I feel that there is no correct answer to either renting or buying. Although renting has no return, it saves people money in short term and is a lot easier to let go. Owning a house can bring great reward in the future, but initially; a huge risk must be taken to purchase a home. One must have great credit for the best interest rates, a very stable job and a huge down payment compared to renting. After all this research about renting or buying a home, I feel that the answer to this question varies for each person, and can sum it down to one phrase; “Only if you can afford it!”
References
http://www.hud.gov/buying/comq.cfm
http://realtytimes.com/rtpages/20090410_houseafford.htm
http://www.ourfamilyplace.com/homebuyer/buyorrent.html
http://homebuying.about.com/od/buyingahome/qt/BuyorRent.htm
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