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. This post will take you through these questions 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 you own it. 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 down payment is required which is between 3 and 20 percent of the home’s value, plus a monthly mortgage. Additionally, there is no guarantee your home’s market value will increase, meaning you may end up selling for less than you bought. This often leads people to rent their first home.
Renters 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 being month-to-month leases. This is one of the most attractive features when people are deciding to rent or buy a home. 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.
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 and can afford the down-payment, then buying is the right decision.