If you’re thinking about buying a home and not really sure what to expect or if you want to sell your home and return to renting, this article is for you! Before making either decision, you want to be sure of all the changes that occur. There are factors that can affect your responsibilities, financial circumstances, and more.
First, the most common difference between renting and buying is who is responsible for home maintenance. If you are a renter, your landlord typically takes care of repairs. Though this frees you of the headache, you are less in control of the space you are living in. The landlord will only update the home when they want to, and not when you ask them to. When you own a home, yes the expense of the repairs comes out of your wallet, but you also have a say in who does the repair, how it is done, how much you pay for it, and when it happens. You may want to consider getting a home warranty if your home is not a new construction property where the developer provides a 1 year builder’s warranty on the home. Along with being able to decide on repairs, you also have the freedom to make the space however you want. Most landlords don’t want their tenants repainting walls or replacing appliances, however, as a homeowner you can tackle projects all your own. Barring any work that is a major structural change and may require a permit, you can make your home however you want.
Though freedom in your space may be important to you, take into consideration not only the financial commitment you make when you own a home, but also the time commitment you make. If you are moving from the city to the suburbs and the home has a larger yard than you are used to, you will need to spend both time and money for upkeep. This is where renting can be deemed more desirable. Not only do you not have the responsibility of maintaining most of what is outside and inside your unit, renting also has more financial predictability because of that factor. Your rent remains the same month-to-month and your utilities only fluctuate so much; you don’t make any repairs or pay for any upkeep so there are fewer unexpected expenses thrown your way. As a homeowner, you also have to make your monthly mortgage payment, pay any taxes, and cover any other monthly or annual costs the city, township, or state may require.
Now to talk about the reason everyone says you should buy instead of rent: equity. Home equity can be defined as the amount of home you own and that is used in comparison to the amount you owe on your home loan. As you live in the property and pay your monthly mortgage rate, the amount of home you own goes up while the amount you owe goes down. If you are looking to sell your current home and buy a new one, if you have lived there for enough time, you can use your equity toward a purchase of a new home. If you are looking to move and want to rent out your current home, you can use the rent as equity toward your home purchase. From a landlord’s perspective, a renter is someone that essentially pays the monthly loan you have on the home, and if rent is more than the monthly loan payment, you create an alternative source of income as well.
Equity and building generational wealth are all fine goals, however, they require a large commitment to be made. If you own a home, you can’t just move out and stop paying the bills. In a rental, if you terminate a lease early, you may lose some or all of your deposit, but you can still vacate quickly if necessary. Renting would be more suited for someone who isn’t looking for commitment in a residence and doesn’t mind not being able to make changes.
Renting can be a predictable expense and homeownership can be a great investment, with neither being guaranteed as better than the other. Our goal is to emphasize that everyone has their own levels of comfortability and everyone has their right time for everything, whether it is to sign a lease or buy a home.
Stephanie Slapin
April 7, 2022