Real Estate Law
Should You Rent Or Buy Your Home?
At some point, most individuals consider the issue of renting a home versus buying a home. It is a big decision with far-reaching financial implications. As part of the decision-making process, it may be helpful to use a rent/buy calculator (easily found on the Internet). Such a calculator will not, however, provide a clear answer. A consideration of other issues is necessary.
In the way of advantages, a renter can live in a particular property without the necessity of making costly repairs. Moreover, it is not necessary for a renter to come up with funds in excess of the security deposit and the first month's rent. In other words, the initial investment by a renter is quite small when compared with that of a home buyer. Lastly, when the lease is up, a renter can simply leave the property as it was without any further obligations.
Renting has its disadvantages, too. A renter has fewer opportunities for tax deductions with regard to the property. Furthermore, a renter has no opportunity to gain equity in the property. Lastly, a renter does not usually have the opportunity to change a rented property to suit his or her particular needs.
Perhaps the most important advantage of buying a home is the opportunity to take advantage of tax deductions with regard to the property at issue. Also, a homeowner may change or renovate the property to suit his or her needs. Another advantage of home ownership is the ability to gain equity in the property.
With home ownership, however, comes a significant amount of responsibility. A homeowner has the responsibility for all repairs to the property, as well as the payment of taxes and insurance. Home ownership requires a large initial investment too, including a down payment, plus closing costs.
The decision as to whether to rent or buy your home is, without a doubt, a very significant decision. It requires careful thought, as well as research. In making the determination, some relevant questions are:
- If I buy a home, what will it actually cost me?
- How long do I plan to stay in the home?
- Do I want to make specific renovations to the home?
- Do I want the responsibility of making repairs to the home?
- What do I know about the neighborhood where the home is located?
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.