RENTING VS. BUYING A HOME THIS NEW YEARFriday, January 11, 2019
Are you entering the New Year with dreams of buying your very first home? If so, you might be wondering if now is the right time to buy. Real estate can be a good investment, hidden and it is important to know some of the costs of home ownership. Because of these costs, deciding between renting and buying a house, isn’t always a simple decision.
At American Savings Bank, we know that purchasing your first home is a huge life decision. We’re here to help! This guide will discuss some of the real costs and advantages to both renting and buying a home.
RENTING VS. BUYING
The biggest difference between renting and buying a house is ownership. If you are leasing a house, apartment, or condo, you are not the owner. Instead, you are paying rent to a landlord in exchange for the right to live at the property.
When you own a home, you no longer pay rent to a landlord. However, you probably will have a mortgage loan and will be making a monthly payment to your lender, as well as payments for property tax, homeowner’s insurance, and costs to maintain the home.
ADVANTAGES OF RENTING
AffordabilityCost is usually the most important factor in choosing to rent a home instead of buying. The relatively lower cost of renting can allow you to spend less money up front. Usually, the monetary requirements for leasing a house are a security deposit and rent for the first and last month. Additionally, you’ll likely not be responsible for maintenance and repair costs when you’re renting a house. This can cut down significantly on your costs over time and give you more cash to put towards savings.
Another advantage of renting instead of buying is the ability to be more mobile. A person living on the North Shore of Oahu who gets a job opportunity in Downtown Honolulu may decide to relocate to the hustle and bustle of a town apartment. This is much easier to do if you are renting, as you can simply choose a more convenient home to rent.
DISADVANTAGES OF RENTING
In the long run, renting a house can cost a lot more than buying a home, especially since you are not building any equity in a home that you don’t own. Additionally, as a renter, you have little control over what happens with the property. This means that the landlord could decide to raise rent after your current lease agreement is up or sell the property altogether. The landlord could also make changes to your lease term or to the property itself at any time, leaving you with little time to adjust or find a new place to live. Renting is also difficult if you have pets. It is difficult to find pet-friendly rentals especially in Honolulu.
ADVANTAGES OF BUYING
Buying a home has its own set of unique advantages over renting. The most significant advantage is that as a homeowner, you do not have to answer to a landlord. Homeownership often comes with more control over the property. Anything from light fixtures to appliances that don’t quite meet your tastes can be changed as you wish. You’ll also enjoy more stability in your living situation. For a family with children, this can mean enjoying the benefits of living within a top-rated school district without having to fear eviction from a landlord.
Another advantage to home ownership is the ability to build home equity. This equity can be used as a down payment for a future home purchase or to secure a Home Equity Line of Credit for various life events, including home renovations.
DISADVANTAGES OF BUYING
Buying a home is a major financial decision. In addition to the purchase price, you’ll have to factor in the cost of property taxes and interest on your mortgage. You’ll also likely need to pay closing costs associated with buying the home. Over time, your home will need repairs and maintenance to keep it in good shape. As a homeowner, you’ll be paying these costs yourself.
FINANCING OPTIONS FOR BUYING A HOUSE
While buying a place to call your own is an expensive undertaking, not much compares to being the owner of your very own home. Luckily, ASB offers a wide range of home loan options to help you get the most cost-effective mortgage for your situation. For example, there are several government-backed programs for first time home buyers. Many of these programs offer lower down payment requirements. Lower up-front costs can help many first-time home buyers purchase their first home.
LEASING VS. BUYING: WHAT SHOULD YOU CHOOSE?
Wondering if leasing or buying a home is the right option for you? Looking over the pros and cons of each option alone may not be enough to determine if it’s time for you to rent or buy. Speak with one of our mortgage experts at ASB to learn more about your available options. Our friendly team is made up loan officers with local real estate expertise to help you determine if buying a home is right for you.
Phone: (808) 539-7907