Renting vs. buying: What is best for you in the short and long-term
8 benefits of buying vs. renting a house so you will be prepared to make a decision based on facts and the experience of other home owners.
Therefore, we present you with eight benefits of buying vs. renting a house in the short- and long-term. In this way, you will be prepared to make a decision based on facts and the experience of other home owners, which will also help you make the most of your money by making the best decision for your future.
Benefits of buying. Rents increase periodically
One aspect to consider before buying or renting a house is your annual budget so you can determine how feasible it is to commit to a lease and how annual increases could affect both your assets and your monthly fixed expenses.
People who decide to rent a property should keep in mind that rents often increase each year, depending on the location and demand for the property. Without a doubt, this is one of the aspects that could make you think twice if this is a good plan for the future and, instead, buy a house with fixed terms established by a financial institution through a mortgage.
Buying is a better long-term investment
Any purchase of real estate is an investment that could pay off in both the short and long term. In the short-term, you will avoid surprise increases in rent, while in the long-term you will have full decision on the actions you take in regards to your property.
This implies taking advantage of the surplus value, although for this you must carry out an exhaustive investigation that allows you to identify what areas have the best projected growth. According to experts, buying a house is a better investment in the long-term, since, unlike a lease, at the end of the last house payment you will be the sole owner of it.
Greater stability and passive income
When you buy a house, you have more rights, which also allows you to access other types of benefits such as renting rooms that you do not occupy to obtain extra income. With this, you will be able to pay for the maintenance costs of your new home and even make the monthly payments for it.
On the other hand, people who decide to buy a house instead of renting have a greater certainty that, by making payments, no one will be able to occupy the same space or evict them due to late rent. This is an excellent option for people who intend to stay in the same city for a long period of time.
Mortgages are usually more affordable than rents
According to some experts, a monthly mortgage payment can be even cheaper than a rent or apartment payment. In fact, it is possible to buy a house with three or more bedrooms for the same amount that would be paid for a one or two-bedroom apartment.
By doing so, you will have full ownership of a house in the area you have chosen. In the long term, you could enjoy economic benefits associated with the increase in capital gains and the development of new projects in the area. If you wish, you can sell the property at any time.
Benefits of renting a house. Zero maintenance or repair costs
Did you know that in the United States 77% of the population prefers to rent a property than to buy it? Although there are multiple reasons for this, the reality is that one of the main attractions of renting a house is that, the costs of repairs and maintenance are usually included in your monthly payment.
In some cases, the rents also include the cost of utilities, a fact that represents an economic benefit for people who have a smaller budget or who do not want to allocate a large percentage of their salary to pay for a house.
Renting does not require a down payment
Yes, it is true that when renting a house it is required to pay an advance, as well as a security deposit that is equivalent to one month’s rent, but the benefit is that this amount is usually returned to the tenant when certain conditions are met, such as keeping the property in good condition, meeting payments on time and completing the established contract in good terms.
In the case of a house, financial institutions require an advance payment of approximately 20% of the total value of the property an amount that a good part of the population is not in a position to collect in the short term.
Renting a property has both short-term and long-term benefits. In addition to those already mentioned, paying rent offers the advantage of residing in a place for less time in case the area does not meet your expectations.
If you want to reside in an area with high capital gains and it is not enough for you right now for a mortgage, it may be more feasible to live in the house of your dreams by renting it. In this way, you can choose to live in a location where buying a property is more expensive, as is the case in New York or Los Angeles, for example.
Lower risk of losing home value
Although the prevailing belief is that all properties increase in value over time, this is not always the case, as there is a possibility that a house will lose its equity for numerous reasons such as natural disasters or low sales in the neighborhood.
As you can see, there are many reasons why it is a good idea to both rent and buy a property. Any decision you make should certainly be based on your short- and long-term plans, as well as your budget and ease of committing to a long-term mortgage for full ownership of a house or apartment.
Refinancing may cause finance charges to be higher over the life of the loan.
Rocket Mortgage, LLC; NMLS #3030; www.NMLSConsumerAccess.org. Equal Housing Lender. Licensed in 50 states. AL License No. MC 20979, Control No. 100152352. AR, TX: 1050 Woodward Ave., Detroit, MI 48226-1906, (888) 474-0404; AZ: 1 N. Central Ave., Ste. 2000, Phoenix, AZ 85004, Mortgage Banker License #BK-0902939; CA: Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act; CO: Regulated by the Division of Real Estate; GA: Residential Mortgage Licensee #11704; IL: Residential Mortgage Licensee #4127 – Dept. of Financial and Professional Regulation; KS: Licensed Mortgage Company MC.0025309; MA: Mortgage Lender License #ML 3030; ME: Supervised Lender License; MN: Not an offer for a rate lock agreement; MS: Licensed by the MS Dept. of Banking and Consumer Finance; NH: Licensed by the NH Banking Dept., #6743MB; NV: License #626; NJ: New Jersey – Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226, (888) 474-0404, Licensed by the N.J. Department of Banking and Insurance.; NY: Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226 Licensed Mortgage Banker-NYS Department of Financial Services; OH: MB 850076; OR: License #ML-1387; PA: Licensed by the Dept. of Banking – License #21430; RI: Licensed Lender; WA: Consumer Loan Company License CL-3030. Conditions may apply.