Buying or owning a home is everyone’s big dream. Choosing to buy or Lease is a critical decision that impacts your lifestyle, personal goals, and financial health. Whatever option you choose will depend on your lifestyle and financial status. The Lease and Buy both need regular income and also need a certain amount of effort to uphold.
But several key points differ in both buying and renting. Renting a property does not begin with all responsibilities compared to homeownership, and the renters have more flexibility because you are not necessarily attached to your property. Owning your own home offers you a significant investment, but it comes at a large cost for maintenance. Here, we highlight some of the important dissimilarities between rent and buy.
Advantages & Disadvantages of Buying a home
Buying a home is one of the beneficial investments. There are many reasons why people decide to buy a home rather than rent, but it also needs to consider the advantages and disadvantages of owning a home.
Advantage of Buying a Home
Equity is one of the beneficial advantages of homeownership. Equity means the value of your home compared to the amount you owe on your mortgage. Your share usually increases as the value of your home rises each time you make a mortgage.
There are tax breaks that create buying and owning property cheaper. An example is the mortgage interest deduction that permits homeowners to subtract the interest amount on a mortgage from their taxable income. They can subtract the amount of eligible mortgage insurance and fees for local real estate taxes. These tax breaks lower the cost of homeownership.
3. Freedom to Renovate
Unless the home is located in a community within the Homeowners Association, homeowners are generally not commanded by any outsiders what their home can and cannot do. If you have your own home, you have the freedom to make those changes if you want to demolish the wall, change your kitchen or add air conditioning.
As a homeowner, you usually pay property taxes based on the value of your home and where you live. This can significantly increase your annual household expenses as some places have higher property tax rates.
The Disadvantage of Buying a Home
1. Maintenance and Repairs
If you are a homeowner, something breaks, or any other problems you can not expect someone else to fix the problem. Own home is also responsible for keeping it in good condition.
2. Property Taxes
Usually, the homeowners pay the property taxes based on the home value, this can notably increase the annual household expenses, and the property tax rates differ from one region to another region.
Advantages & Disadvantages of renting a home
Renting gives more flexibility compared to owning a home and may be a cheap, expensive option overall. Here are some reasons to consider renting instead of buying.
Advantages of Renting a Home
No Responsibility for Maintenance and Repairs
When it comes to owning and renting a home, one big difference is that tenants are not responsible for the amount of home maintenance and repairs. The property owners are responsible for this maintenance and repairs. The tenant generally does not have to worry about unforeseen costs, such as leaking pipes and broken water heaters because they just paying the rent amount.
Less Overall Risk
Homeowners face more risk that their property may be damaged by a natural disaster like fire, rain, etc, or another event. In addition, if a homeowner fails to pay off their mortgage, they may lose their home in advance without repaying the loan. Tenants do not face any risks because they have no rights over homes and any equities.
Regulated Monthly Expenses
If you are an up-and-coming mobile employee in a field that demands a reward or frequent relocation, renting a home may be the right choice. Renting gives you the flexibility to carry around with minimal financial penalties. Some leases may come with some utility costs included in the rent. In addition, tenants are not obliged to pay for other homeownership expenses, such as repairs and maintenance. It helps to regulate monthly housing expenses for tenants.
The Disadvantage of Renting a Home
While there are many benefits to renting a home, there are disadvantages to consider when choosing whether to rent a home.
Less Control Over the Home
Tenants do not own the place where they live, so they are not free to make any changes to the place. Tenants must obtain a permit from the property owner if they need to make any minor alterations or renovations to their home, otherwise, the lessee may face the risk of violating the terms of their lease.
Risk of Rent Increases
If you have a home for rent, the property owner may increase the rent whenever your lease expires. According to some research, the average rent in the United States, Europe, and some other countries increased by 17.8% between January and November 2021. Between January and November each year it was 2.6%. Data show that in some areas, such as New York City, although there may be laws governing how much rent can be increased, tenants’ housing costs generally increase over time.