To Rent or Buy? – A Question That Requires Careful Consideration
Everyone needs a home to live in, and it is one of the first things that people think of, once they are launched on their chosen careers. At an early stage of an earning and working life, the cost of buying a home can be high and daunting. This is the reason that many people will go in for renting a home instead of buying it.
Whether you rent or buy, in both cases, this requires the regular payment of some amount of money. When you rent, this payment is being made to increase the income of a landlord, with no other advantage to the person paying the rent, other than a place to stay in. When you buy a home, the payments that you make go towards paying the mortgage amounts that you have taken out against your home from lenders.
In both cases, renting and buying, there is often an upfront cost that may require a deposit. Rented homes require deposits that can be up to a year’s rent or some other form of security that the landlord finds acceptable. Mortgage lenders will require you to make a deposit that can vary from 10 to 20 percent of the value of a home. The higher this amount, the better terms you get for the repayment of the loan.
Renting can often be a sensible alternative when you are moving to a new town or when you change your job or career. It gives you the time to get used to the new environment and allows you the time to look around for a home that suits your circumstances. Mortgages at times can be demanding of a good credit history, and if you do not have a good one, renting can help you to have the time to improve your credit score so that you become a better prospect for mortgage lenders.
When you have your home, you are immediately liable for any repairs to it. When you rent, you only have to call up the landlord and ask for the needful to be done. A homeowner has to immediately be responsible for paying property taxes and other dues that a renter will not have to bother about. A renter may not be able to make any changes to a home without the permission from the property owner or agent. A homeowner can make any changes required, as long as he can find the finance for it.
Mortgage rates remain constant for the period of the mortgage, which can be as long as thirty years. They will change only if you go for refinancing your mortgage or want to change the terms of your agreement. This allows the person to be always in control of the financial situation and plan for it years ahead. Rents are fixed for a particular period, which is rarely more than a couple of years at the most. The rent can then be raised, or the renter may have to bear the additional cost of shifting if the new rent is beyond his paying capacity.
Payments made to landlords are lost, while payments made against a mortgage for a home that you buy, create an equity that creates ownership rights. Rents can remain a permanent drain on resources. Mortgage payments will cease after some time and leave you the clear owner of your property.
The buying of the house is an investment, and its value can always fluctuate depending on the economic situation. A bought home, however, gives the pride of ownership. Renting, or leasing is good for assets that will depreciate, while ownership is best for those whose value appreciates over time.