Buying a new home may or may not still be the American Dream. Whatever the case, it still ranks near the top of the list of desirable things for most people, right up there with love, health and money. But while almost everyone dreams of someday owning a home, not everyone is as sure about the time frame. It’s a big decision, to be sure. For most people, buying a home means getting a 15, 20 or 30-year mortgage, and that’s a big commitment. But in exchange for that commitment you get something equally big thing: the joy of homeownership. But as nice as it is to own a home, it doesn’t always make sense for everyone. Below are some pros and cons that come with each.
Take a test drive. If you are new to an area there’s no better way to get a feel for whether it’s right for you than by moving in and test it out. Actually living in the area will yield important information on such things as crime, noise, traffic, convenience, etc. It’s impossible to know all the nuances of an area without becoming intimately familiar with it. Renting affords this option without the risk of a long-term commitment, financial or otherwise.
Career/job uncertainty. Sometimes you can’t be sure what the future holds for your job or career. If you can’t rule out the possibility that you may have to move, possibly due to a job transfer or change of career, then renting offers the advantage of not being tied down.
Questions about your future earnings. The last thing you want to do is be financially strapped with a mortgage after receiving a pay cut. Conversely, what if your income takes a turn for the better? It would be nice to move up to a nicer home without the hassle of having to first sell your existing home. Renting allows this freedom.
Credit concerns. Most people want to pay their bills as agreed. But life happens, and there is not always enough money to go around. Loss of job, unexpected medical bills, divorce, etc. These are just a few examples of life events that can lead to bad credit. Renting offers the advantage of building a documentable payment history. This can come in handy with loan programs such as FHA, which allow such payment histories to be used for loan qualification.
Maintenance-free. Sooner or later things break down. Not owning a home means also not having to deal with repairs and other maintenance issues when then arise. Broken sink? No need to shell out an unanticipated $300. Just call you landlord, and with any luck, you’ll be back in business in no time.
Other Expenses. Not being a homeowner, in many cases, also means you aren’t responsible for paying such things as garbage removal, sewer and other utilities.
While the above is not an exhaustive list of the merits of renting versus buying, it covers the main ones. But what if none of these reasons apply to you? Does it make more send to buy? Click here to read some of the advantages of buying a home.