Your Freedom To Leave Is Their Freedom To Make You Leave
Home ownership is something that makes you feel secure. Knowing that a landlord cannot come knocking and reclaim their property because they want to turn it into a coffee house or studio apartments or just take it back to refurbish and rent to someone else for twice as much. In most places tenancy laws make it much more difficult than it sounds to recover a house or apartment from a tenant, but it could happen.
If you own your home you will probably have to deal with taxes, insurance home loan payment and repairs. In either case, there are hassles and burdens that you have to respond to. So the question is: What are the basic differences and what might make one way better for you than the other?
The short answer is of course that it depends. Renting might be right for you one year and owning another. However, in the United States today the game is tilted in favor of home ownership. That is why around 65% of residences in the U.S. are owner occupied, according to the Census Bureau.
Home Ownership Is Still A Good Deal
Renting gives all of the equity to the landlord if home values rise. You are paying the interest payments for their loan on the property as well as adding to their principle. This got turned around during the property bubble of the last decade. Housing prices but rents did not keep up. So if you wanted to buy a home the interest payments alone were way above market rents. You would have been better off renting at that point in time.
As property values have returned to a more sensible level, rents have caught up. According to the National Association of Realtors, the number of renters paying half of their income or more in rent has increased dramatically. In the urban areas of the country tenants accept high rents as the price to be where they need to be for work, family and quality of life.
The right time to buy is when you are ready. Leasing a rental property lets you keep your options open if you are unsure of where you will be in a year. The costs of buying a home and home loan fees mean that it is a long-term decision, one that ties you down while you wait for your equity to grow enough to cover all of your costs.
Buying And Owning Your Home Made Easy
Financially it usually works out that the cost to buy your home is lower than renting the equivalent house. Government-backed loan programs, such as FHA and mortgage insurance makes low down payments possible. The hassles of finding the money for property taxes twice a year are less of a concern when you finance. Lenders will impound the taxes as part of your monthly payments, making it a non-issue.
It is true that, as a homeowner, you have to worry about insurance and repairs but for many people, dealing with such things in return for the right to control how they fix up their home is a bargain.
Freedom Versus Equity Building
Renting gives you flexibility and the freedom to move, without responsibility. Buying gives you control over your domain and stability that is very desirable at a settled stage of life. If you work out the numbers it tends to favor ownership because of government-backed loans such as FHA and low down payments, as well as the equity stake you will build over time.
If you want the freedom to pick up and leave anytime that is great, but you might have pay a financial premium for it. Otherwise, if you are more settled and looking to build some equity, buying your home might be an option that is priceless.