The American dream – it used to include a white picket fence, a couple of kids and a dog running around the house. The problem with that dream in the 21st century is that the house that everything revolves around is something that most of the people in their 20s and 30s cannot afford.
So, does that mean you should give up the dream? Or maybe just delay it? if you are wondering whether to rent or buy a home, you should read these pros and cons first. They will definitely help you in deciding whether you should be a home owner or keep renting homes and apartments.
Rent vs. Buy – Pros and Cons
Since 1975, the appreciation for housing has been around 4.5% per year, which is a good figure if you are looking to buy a home. However, the appreciation isn't the only thing you should take into account when trying to decide whether to buy or rent a home:
Renting a house or an apartment means that you have the power to decide whether or not to change your housing situation at any given time. If you buy a home and take on a mortgage, you are tied up by your contract and moving out isn't always easy. When speaking of flexibility, renting is definitely the better option when you are young. If you have a steady job and are starting a family, buying a home that gives you stability is the better option between the two.
Renting an apartment or a small house means that you pay less for utilities and insurance than you would with a home that you own. When renting, you also don't have to deal with property taxes, so that's a big plus to renting vs. buying a home.
Control over the property
When you are trying to decide whether to buy or rent a home, the control over the property is also an important consideration. When you rent an apartment or a house, you have no say on what happens to it, and when your lease is up, the owner can ask you to leave or increase your rent. That means that you have no control over what happens to you in the long run. In that sense, buying a home is a lot better than renting because it gives you the control and peace of mind that you are the one who decides what happens to your home and everyone in it.
Long term expenses
When you rent a home or an aprtment, you don’t have to spend any money on maintenance, and if something goes wrong in your house, the payments come out of the owner's pockets. When you own a home of your own, you are the one who has to pay all the maintenance expenses that build up over the years.
With this one, buying a home is the big winner. When you buy a home you may have to pay a 20% down payment but unlike renting, that money is an investment. With the yearly appreciation and paying off the mortgage, when you buy a home you build a solid equity that will not only make you feel good, but also look good on paper. Renting on the other hand means that you will never see the money you payed every month and you will have no equity.
So, these are the major pros and cons of renting vs. buying a home. If you are trying to decide what is best for you, think in the short term and the long term. If you are young, don't have a steady job and are not sure of where you want to live, renting is the best option for you. If you have steady employment, want to build equity and can afford the down payment and monthly mortgage payments – you should buy a home for that dog to run around in, and build yourself not only the American dream, but also equity. That's the new dream.