Buying A Home Vs Renting

Whether to rent or to buy depends on your individual circumstances. Here are a few factors to keep in mind.

Making decisions about living arrangements is something we all face at one time or another. While once the norm was to move out of our parent's home and buy our own, that is no longer the case. The increased mobility of our society, the fact that more people are waiting later in life to marry, and several other factors influence our choices regarding living space.

Buying a home or renting a house or apartment each has unique points that make them attractive for different people in different situations. By taking a close look at where we are in our lives and careers, we can make the choice that best fits our individual circumstances.

It is no secret that buying a home brings with it certain tax advantages. Federal law provides for deducting the interest on mortgages for both first and second homes. In addition, many states also offer incentives for people to buy permanent homes and identify them as their primary residence. These tax breaks are powerful motivations for securing a home, especially if one anticipates living in the area for a number of years.

For some people, purchasing a home is simply a matter of good money management. In their opinion, each monthly mortgage payment is increasing their stake in a permanent asset they will be able to pass on to their heirs, and is far more preferable to a monthly rental expenditure, where essentially one is getting the full benefit as one goes along. Being a vested home owner also creates a tangible resource against which money may be borrowed via a second mortgage, should unexpected expenses, such as medical emergencies, arise. Owning a home provides a resource for both the future and for the present.

Along with the long term investment and the creation of an asset, the home owner would contend that today's mortgage rates are very competitive with even the most reasonable of rental rates. Given the chance to rent a space for the same rate as a mortgage payment, why not buy and build up equity?

Home owners also often crave space that provides them with a degree of privacy that is not usually associated with a rental arrangement. Within the confines our their own property, they are free to landscape the yard as they choose, have a garden, paint the home any color they wish, and in general enjoy a flexibility in their living style that is often not available to tenants. For people who enjoy molding their living space to suit their own particular needs, owning a home is the only way to go.

Another consideration for owning is the sense of continuity that comes from passing a home from one generation to another. Precious memories are stored within the walls of a home that bind together parents and children, and possibly even grandchildren. Family heirlooms may be found in various rooms or in the attic. The desire to revisit days gone by and preserve that which a former generation created is strong within many people. This respect for the past and those that have gone before can play a huge role in making the choice to become a home owner. In like manner, a couple who come from a background where there is no generation family home may feel keenly the desire to establish one for future generations.

Persons who rent sometimes see advantages that outweigh the perks of owning a home. As an example, as the pace of living becomes ever more frantic, people do not have the spare time to devote to their homes they once had. The idea of having a garden to tend or a yard to mow holds no appeal at all. The same applies to replacing carpet or major appliances. Why expend the time and money it takes to maintain a house, when that responsibility can be more competently handled by a landlord? That same time and money can be used for other pursuits, both personal and professional.

When it comes to securing a home as a tangible asset, the committed tenant would conjecture that resources that did not have to go toward taxes or upkeep can be diverted into money markets, stocks and bonds, and other means of creating a financial cushion. The result could be realization of growth of an investment portfolio in a time frame that would not be possible if a large chunk of available monies were going toward replacing windows, as an example. Better to invest now rather than later.

On the subject of taxes, a tenant may point out that while the deductions for mortgage interest may appear significant, it may or may not result in a large difference in the actual tax return, depending on gross income and other authorized deductions. If that is the case, the small advantage gained by tax deductions related to the mortgage become less and less of an incentive to own a home.

With more and more people changing employers during the course of their careers, and transferring to different locations with the same employer, selling a home on short notice can be a trial, and possibly would even have to be done at a loss on resources invested up to that point. In the case of the tenant, most leases do provide a clause that releases the renter in the event of a job transfer to another location. The migration is simple compared to the headaches of selling a home and the potential headaches associated with getting a home ready for sale, especially if the sell does not occur before the owner must report to their new job location.

In the final analysis, there is no one right answer that will apply to all people and all situations. Each person should evaluate their individual circumstances and determine for themselves which living arrangement makes the most sense from the perspective of lifestyle and finances. By carefully taking into consideration the positive aspects of both renting and buying, you can reach a choice that will serve you well.

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