Find out the advantages and disadvantages of renting and buying a home to see which one is best for you.
Whether you decide to rent or buy a home for your family, it will be one of the biggest life decisions that you will have to make. The house that we will get will affect your lifestyle, the amount of money that will be left to you at the end of
the month, and will dictate how big your accumulated savings will be over the years.
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| Photo by Karolina Grabowska from Pexels |
How To Know If Buying Or Renting A Home Is The Best Option For You
The pros and cons of buying your own home
People buy a house because it is important to have a place to put down their roots; something that they can call their own. It is an investment that can
grow and it can also be a source of tax deductions.
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In 2020, the homeownership rate jumped to the highest level since 2008 according to Bloomberg, as people saw it as a way to build wealth.
But don’t forget that your home can lose value due to a lot of circumstances such as significant population decline and a
surplus of housing. The house you bought today might not still be worth the same after 30 years, which means you've lost money after inflation.
Owning a home brings intangible benefits, but it is not for the nomadic types of people, as they need to go from one place to another to look for greener pastures. Also, real estate is an illiquid asset, which means you might not be able to sell it when you want if the housing market is down.
A house is not an investment you can use for an emergency unless you want to sell it at a price
that you will lose much of what you’ve invested in.
Even if the monthly mortgage payment is similar to, or lower than the monthly
rent, the overall cost of homeownership is still higher than the overall cost
of renting because of the taxes, insurances, and maintenance expenses you have
to pay as the owner.
The pros and cons of renting a house
Renting a home, on the other hand, offers a lot of flexibility. When you rent a home, your monthly
expenses are predictable and there is someone to handle repair and maintenance
expenses, plus you can move without penalty whenever your lease ends.
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| Photo by Karolina Grabowska from Pexels |
However,
if your landlord decides to sell the property; it also means you have to move
suddenly, or worse, they could just bump up the rent to more than you can
afford.
Renting might be affordable but it doesn’t give you the freedom to do whatever
you want in the interior and exterior of the property.
Another disadvantage of renting is the possibility of unpredictable rent increase each time the lease is up for renewal. Furthermore, rent increases
can be steep if you’re living in a strategically located property.
A mortgage calculator can help you decide
If you can’t decide which option is best for you, you can use this free online rent or buy calculator to help you out. The result from this tool will enable you to quickly decide
if it is likely to make more sense to rent or purchase a home.
Using the basic tool will show how much home you can afford to buy while
paying a monthly payment equivalent to your current rental payment.
To use the calculator, fill out the following details:
1. Mortgage Details
- Monthly rent payment (used as a total monthly home expense)
- Mortgage term in years – can be availed up to 30 years
- Annual interest rate (APR %)
- Private mortgage insurance (PMI %) – can be avoided by paying at least 20% down payment
2. Ownership Expenses
- Annual property taxes
- Annual Homeowners insurance
- Monthly HOA fee
The result will show you three scenarios when you pay 0%, 10%, and 20% down payment. You can use the values to decide whether you can afford to buy a home
in your current financial situation or you’d be better off renting.
Epilogue
Always remember, owning doesn’t always make more sense, and renting is not always a way to save. Before buying, you need to weigh the risks involved as
getting a mortgage often requires using a large amount of financial
leverage.
The decision to rent or to own is not just financial but also emotional so
consider the pros and cons of each to figure out which is best for you.
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This very helpful blog and thanks for sharing po. Investing for the future is very necessary especially when it comes to security of the whole family. Having our own house is one af the best option and the best thing that we should pushed. True that we have to consider the pros and cons of choosing in how to invest.A house is not an investment you can use for an emergency unless you want to sell it at a price that you will lose much of what you’ve invested in. This is very true and very needed.
ReplyDeleteThank you po for sharing this blog . Malaking tulong po ito lalo na sa mga bagong buong pamilya . Makakakuha dito ng mga tips kung ano ang icoconsider nilang pagadating sa pagpili ng tirahan ..
ReplyDeletePero para po talaga sa akin, dapat po talaga magkaroon ng sariling bahay. Yung iyong iyo na talaga.
Never ever missed one thing because they are absolutely helpful to us. All are included,to be considered in anyways and any means
ReplyDeleteThank for sharing this daddy Ivan sa ngayon po Ang laking tulong po sa amin nito lalo na ako nag rerent lang ng house iniisip po namin at sa panahon ngayon Ang hirap po talaga😞 sa blog po ninyo mapapaisip talaga kami kung alin po talaga Ang mas magandang Ang mag rent o sariling bahay Ang laking tulong po nito sa amin 🥰👍 thank you po ulit 😊
ReplyDeleteWorth it to read po. Thakyou for sharing this po daddy ivan. SOBRANG laking tulong po talaga nitong shinare nyo. Very informaltive blog! 🥰 Sa totoo lang po mas gusto ko napo magkaroon ng sariling bahay kesa sa nag rerent lang. Tulad ngayon nangungupahan lang po kami kaya sobrang hirap lang dahil dagdag expenses din yan. Imbis na yung pinang babayad mo ng upahan ipambili nalang nag makakain at makakaipon pa tlaga kami..
ReplyDeleteaww thanks po sa pag share nito laking tulong po magagamit q tlaga to in the future kapag nagka sariling family na dn po aq ☺
ReplyDeleteThank you for this daddy ivan.Lalo na sa pag share ng mortgage details.Great helps sa lahat especially sa mga nag rent and may planong bumili ng sariling bahay.
ReplyDeleteThis is very helpful po. Lalo na sa undecided kung bibili o mag rent lang. I love that you detailed each pros and cons, it's a great help in order to consider which of the two is preferable. I like the mortgage calculator that you have introduce, it's a nice tool.
ReplyDeleteThankyou for sharing po daddy 😍 Very helpful po ito para sa aming lahat atleast may idea kami kung ano ang best option lalo na kung di kami makapag decide kung bibili kami ng bahay o kaya naman mag rerenta nalang. Happy Tuesday po
ReplyDeleteThankyou for sharing po daddy 😍 Very helpful po ito para sa aming lahat atleast may idea kami kung ano ang best option lalo na kung di kami makapag decide kung bibili kami ng bahay o kaya naman mag rerenta nalang. Happy Tuesday po
ReplyDelete