What's better? Rent Or Buy?

Everyone wants to own a home. With the market taking a downturn, people need to seriously weigh their options. Which is better, renting or buying?

Several factors go into making a decision about home ownership. Some see it as the American dream and forget that investing in a home is a big financial step. Those who are not ready for it can experience “buyer’s remorse” and get in way over their heads.

Consider the area in which you live or are planning to live. What are some of the monthly rental prices? What are some of the monthly mortgage prices? If both are about the same, buying a home may be the better option.

When looking to purchase a home, find a neighborhood that will appreciate in value. All neighborhoods will appreciate to some degree over time, but there are those that will appreciate more because of location. Are there schools nearby? Shopping centers? Fire stations? Cultural attractions?

All of these things combine to raise the value of your property. Developments with home owner’s associations collect dues for the upkeep of the neighborhood. The association also sets down rules and regulations regarding the appearance of the homes it governs. These associations strive to keep the value of their homes going up to the benefit of the homeowners.

Home ownership is usually a long-term option for many. When they decide to purchase a home, it is to have a place of their own. Most want to raise a family in a dwelling with a yard where they can do as they please. In an apartment, putting pictures on the wall can be a no-no. In your own home, you can make changes to the interior as you see fit.

Renting over the long term is an option for some. If an individual has no family to look after or no desire to do yard work or pay dues, then an apartment may be a suitable alternative. But, when an individual lives in an area where the rental rates are steep, they could be losing money hand over fist by not investing in a home.

Purchasing a home for the short-term may not bring you an appreciable return on your investment. Depending on the state of the market, your home may not increase in value more than two percent over the next year or two. With the other bills that accompany home ownership, you could lose more money than you stand to gain. Homes require less of an appreciation to come out ahead the longer you own the home.

Renting is an excellent short-term option. A person that is constantly relocated for work or in school stands to save money when renting. There are no bills for monthly maintenance. If something breaks, the landlord must fix it. You won’t be able to decorate the walls, but if you plan on staying there less than a year, you probably aren’t worried about that.

There are pros and cons for both renting and owning. Consider your needs along with the term of stay and the real estate market. If you plan to stake down roots, a home builds equity which is money that you can use later on. With a rental, the landlord makes the money. Talk to a financial analyst for market predictions and weigh your options.