Renting Vs. Buying a Home This New Year
ByASB January 11, 2019 | 5 min read N/A
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
Cost can be an 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. For example, a security deposit in Hawaii is a month's 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, at the end of one’s lease you have little control over what happens with the property. This could include raised rent, changes to the lease term, or the landlord may make changes to the property or sell it. This could leave you with little time to adjust or find a new place to live. Renting is also difficult if you have certain kinds of pets. Finding pet-friendly rentals could involve additional time.
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.