Why Rent When You Can Buy Your Home?
Oct 09 '00
I am currently renting, but plan on buying soon for a number of reasons. I will try to point out the good and the bad points of both so that it may help you to make a better decision. I've been in both places and both have their advantages and their disadvantages. Which is best for you depends on a variety of factors.
Renting - Advantages
If you are not planning to stay in your current location, renting may be for you. After all, why tie yourself to this property if you are planning on moving away soon. Renting is a terrific short term plan for those who move often.
Another advantage to renting is that you don't need to worry about making your own repairs. Whether you have a leaky pipe, or a leaky roof, your landlord is the one who is required to fix the problem. Of course this does exclude any damage caused by your family, but does include all problems which are just normal wear and tear. The convenience of having someone else make repairs can be a major advantage to those who are not handy at such things themselves.
If you rent, you will not generally need to come up with as much cash up front as you would need to buy a house. Often you will need to pay first and last month's rent, as well as a security deposit. This can add up to quite a bit, but not usually even close to what you would need for a down payment on your own property.
Renting - Disadvantages
When you rent a house you are not earning equity in your property because you do not own it. You are simply paying the payments for someone else. When you move out, you really have nothing to show for your money spent.
Another disadvantage is that you are sometimes basically at your landlords mercy when it comes to getting repairs done. Technically, the landlord is supposed to fix things, but I've seen too many times where it has been a battle just to get things done.
At one time, a couple of friends of mine had no heat for several weeks in November and the landlord refused to fix the furnace. They were expecting their second child at the time and had a 2 year old child. In Michigan, you need heat long before November. I eventually invited this family to move into my home with my children and I until they could find another place.
I have been battling with my landlord for over a year now to fix some leaky pipes. The leak would not have taken long to track down and fix, but now the floors will all need repaired or replaced due to water damage. If you want to read more about this battle read my review titled "Don't Be A Slumlord".
Additionally, when you are renting property you must follow the rules your landlord may decide on. You may not be able to have pets or children in your home. Some landlords do not allow smoking, or drinking in their rental units. I would never suggest renting a unit where the landlord lives next door. Sometimes it will work out fine, but far too often a nosey landlord will watch your every move.
Renting from friends and relatives was, at least in my case, not the best move I ever made either. It caused nothing but hard feelings because I felt that I was constantly nagging them to fix things, and I think they felt the same, but I wouldn't have needed to complain if they had fixed them right the first time. I ended up moving out when the heat was never fixed to my satisfaction.
Buying - Advantages
Once you buy it, it is your's. I have to say that I'd rather pay the same amount towards my house payment that I'm paying for my rent. After all, why pay someone else's mortgage payment when you could be paying your own?
If it is your property, you have more freedom to do what you want there. There may be local ordinances restricting how many animals you can have on the property, but no one can tell you that no pets are allowed in your house. As long as you don't break the laws, you can do as you please.
Unlike renting where you will be staying only a short period of time then moving on, buying is probably the best option for those who plan on staying in one place. You can get a 15 or a 30 year mortgage, and when it is paid off, it is your's. If you wish to move elsewhere, you can always sell or rent your first house and buy another.
With your own home, you will have a lot more options as far as remodeling, redecorating, etc. You may not be able to repaint the walls, or have the carpet replaced in a rental unit, but you can do these things in your own home if you choose.
Buying - Disadvantages
It's your house, so if repairs must be made you will need to either do them yourself or contract someone else to do them. Depending on the nature of the repairs, this can be rather expensive at times.
You will also be responsible for paying taxes on your property. The taxes will vary depending on the value of your property and your location, but they are one thing which must be paid.
You will generally need to come up with a larger sum of money in order to begin the purchasing process. Most places require anywhere from a 5-20% down payment on your property. This is in addition to the closing costs and other fees associated with a home purchase. Sometimes it can be difficult to get the financing you need.
When you sign the purchase agreement, you lock yourself into a long term commitment. You must be prepared to make the monthly payments, in addition to taxes and insurance, for the duration of your mortgage.
Other things to consider
Though renter's insurance is not generally required, it is a very good idea to insure your belongings whether renting or buying. The rental unit may be insured, but that does nothing to replace your belongings in the event they are destroyed.
Take it from someone who knows, you can quickly loose everything in a fire if your home is not insured. I lost my home, two children and most of my belongings in a fire several years ago. My children can never be replaced, but if my home had been insured, I would have had the funds to rebuild my home rather than renting for the past several years.
This was a lapse in insurance. The new policy would have been in effect the following week, but the fire swept through and took nearly everything from me. My life has been forever changed. Don't let this happen to you.
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Member: Kelly
Location: Northern Michigan, USA
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