One of the biggest financial decisions you'll make in your life is whether to buy or rent your home. Let's take a closer look at renting vs buying a home and the advantages and disadvantages associated with each option. Before you jump the gun and sign a contract, either for a mortgage or rental lease, you should read the following.
Renting vs Buying a Home
One of the benefits of renting your home is coverage for repairs. Normally, the landlord is required by law by perform all necessary repairs. If your air conditioner stops working or the water line breaks, the landlord will fix it at no cost to you. This is in stark contrast to buying your home, in which case you'll be responsible for all repairs and maintenance. With that said, you can purchase homeowner's insurance to cover many of these repairs.
Some people assume that monthly mortgages are more expensive than monthly rental payments, but this isn't necessarily true. According to a GoBanking Rates survey cited by BusinessInsider, the costs are pretty similar. In Wyoming, for instance, the average rent was $1,100 in 2016 and the average mortgage was $1,199. Here in South Carolina, renters paid even more than homeowners at $1,250 compared to $1,121.
When renting a home, you'll likely a have restrictions regarding what you can and cannot do it. The landlord, for instance, may prohibit you from painting the walls, installing new cabinets, or performing other major renovations. Of course, this isn't a problem when you buy a home, as it's yours to do as you please.
Arguably, the greatest benefit of buying your home is the ability to build equity (ownership) over time. With each monthly payment, a portion goes towards the interest, while the rest goes towards the principle. And with each dollar added towards the principle, you'll gain equity in your home. Eventually, you can use this equity to obtain a new home equity loan or refinance your existing mortgage.
There are upfront costs associated with both renting and buying a home. When you buy, you'll probably have to make a down payment, as well as closing costs and other fees. When you rent, you'll probably have to pay a security deposit, and possibly a pet deposit if you have a pet.
This article was brought to you by Premier Island Properties - A full service real estate firm serving Hilton Head Island and Bluffton, South Carolina. For more real estate news, information, and interesting facts about the Lowcountry, please visit our website.
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