The heated debate over buying vs. renting a house has been going on for years. People who are in favor of either of the two, hold strong believes and nothing can change their view. While we aren’t here to add our two cents to the topic, following are the pros and cons of buying vs. renting.
Buying a home
Buying a home has a lot of upfront costs attached to it, some are paid right after the deal is signed while others at closing. Upfront payments such as earnest money, down payment, home appraisal, property tax, closing costs and homeowners’ insurance need to be made directly. Some homes for sale in Phoenix AZ aren’t in great conditions so you need to pay for the repairs as well in order to get the home inspection cleared. All these payments depend on the state you live in and the laws that apply in your district.
The recurring payments are also a part of the ownership; some of these are paid separately while others are paid to the lender in monthly escrow. These specifically include loan payments, property taxes, homeowners’ insurance, private mortgage insurance, utility bills and maintenance bills. However, as an owner there are some other special payments that you need to make once. These include furnishing, repairs, improvements and renovation and the moving cost as well.
Pros: buying a property has its own advantages, the biggest benefit of owning a house is that you are able to build the equity. It also includes tax benefits such as homestead exemption and federal tax deduction. Another pro of owning a house is that you can rent it out and earn from it. You have the right to do whatever you feel like with your property such as DIY projects.
Cons: You might end up with a great financial loss if you make the wrong investment. You have to pay a lot of money upfront, pay for the repairs and buy furniture as most homes aren’t furnished at the time of sale.
Renting a Home
You can find plenty of homes for rent in Phoenix AZ at great prices but they also have some upfront payments that you need to make. Although you don’t have to deposit a hefty down payment for purchase but you still have to make the security deposit, first month’s rent payment, nonrefundable deposits for instance pet deposit and of course the added moving cost.
The recurring costs on the other hand include monthly rent, pet rent (if the owner isn’t asking for a pet deposit), renters insurance, utility bills (in case of buildings) and laundry.
Pros: You don’t have to worry about the maintenance and repairing costs and several multi units have a shared utility plan making it easier on the renter. Relocating is easier as you don’t have to move with furniture and there is less credit involved comparatively.
Cons: You might be unable to build the equity, there aren’t any federal tax paybacks involved and you technically have no control over the housing cost.
Here is everything that you need to know about buying vs. renting. Both have advantages and disadvantages so you can choose between the two depending on your financial situation.
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