Bying or Renting a HomeBuying a Home or Renting

Although, like any financial investment there are some risks and challenges associated with buying a home but the positive aspects of homeownership easily outweighs the risk. The exception to the rule is the unfortunate homeowners who purchased their properties during the height of the market and the artificial real estate boom of the past decade. Today’s market, however, offers a safe environment comprised of lower priced homes and all-time low interest rate. While renting was considered as playing safe in the past few years, it is an absolute waste of your money in today’s real estate market.

The Comparison Between Buying and Renting a Home

From the financial point of view, homeownership has been one of the most solid investments for the American families during the past decades. Think of paying your monthly mortgage payments like a mandatory saving plan. The more money you contribute to your mortgage amount the more savings you will accumulate. It is important to mention that although at the beginning the larger portion of your monthly mortgage payments will go towards the interest and a very small portion towards the equity but this ratio will change over time, becoming of the same value halfway through the loan. From the day you enter the second half of your mortgage, the ratio of interest rate/equity becomes more in your favor by allocating more of the monthly payments towards the equity and less towards the interest.

Another point to consider is the rising costs of the rental properties. Although the home ownership might prove to be more expensive than renting but over time, the tide will turn in homeowners favor. This is primarily due to the ever rising cost of rental while the monthly payment of any average 30-year-old mortgage will remain the same throughout the life of the loan. This means while the rental amount will adjust to the inflation rate in the coming years, paying the mortgage, on the other hand, is like an insurance that protects you against such inflation.

You receive all these benefits while enjoying the wonderful feeling of the home ownership and living in an environment that is designed by you. In comparison, many homeowners will eventually have the chance to make some improvements to their home in order to create a living area that matches their taste and personalities as well as the wants and needs of the families. But when it comes to renting any attempt to make such improvements to any rental property is either not permitted by the landlord or it becomes a waste of the tenant’s money when they move.

Most rental apartment buildings are designed to maximize the number of the rental units and there is a little chance to offer a storage space. Most landlords will not allow the slightest alteration to the rental units and some would not even allow any changes to the interior painting. In some instances. tenants are forced to live in an unsafe environment due to the landlord’s refusal to fix such problems.

Although there are many advantages in purchasing of a home but no one should take this venture lightly and become involved in a transaction that might result in the loss of their lifetime saving as well as their credit. Home buyers should always seek advice from real estate professionals who are licensed and act as an expert during the entire transaction, from finding a home, negotiating the price, all the way to the final closing day.


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