A question many people ask is; is it best to buy a home or rent? Renting versus buying is a complex subject, and the answer is highly dependent upon each individual’s situation. In addition, should one decide to buy a home, is it better to buy a single family home or a condo? Here are some pros and cons of buying vs. renting so that you can decide for yourself which option is best.
Pros of Renting a Dwelling
Whether one rents a home, apartment or condominium, there are generally quite a few perks. Here are the top three pros of being a rental tenant.
Low Maintenance—Besides cleaning, lawn maintenance (in a home) and basic tasks like changing air filters and smoke detection batteries, renters aren’t typically responsible for making or paying for any repairs. Landlords typically handle these issues.
Greater Mobility—Individuals who find themselves frequently moving due to work or other situations will appreciate the freedom to move just about any time their lease is up.
Lower Monthly Costs—Rental prices are often less than mortgage payments, which have a lot of added in fees such as insurance and taxes. Renters of condos may be asked by owners to pay homeowner association fees, but many cover this with rental fees.
Cons of Renting Property
Along with the perks of renting, there are a a couple of downsides to consider as well. Generally, most landlords and apartment complexes prohibit remodeling by tenants such as painting or installing new floors, ceiling fans, lighting or countertops. Even getting new blinds may require approval and tenants may have to use only neutral colored curtains and follow other decorative rules. Furthermore, renters are essentially paying for someone else’s asset whether it be an apartment’s investors or an individual landlord. Monies from renters often goes towards mortgage payments and property taxes. Renters build no equity, but owners do.
Pros of Buying a Home
Besides the personal satisfaction that accompanies homeownership, there are quite a few other benefits that potential new home buyers in Cypress, TX should consider.
Homeowner Tax Deductions—Mortgage interest is typically 100% deductible on owner’s federal taxes and state taxes if applicable (subject to some limitations), which can equal thousands in savings. Other deductions (which may also be limited) could include property taxes, home equity loan interest, private mortgage insurance, and certain homeowners may be able to take home office deductions if they work from home.
Owners Build Equity—Every mortgage payment builds equity that can be borrowed against when needed, and once paid for the home becomes an asset. From that point, only property taxes, insurance and any association dues will need to be covered.
Freedom to Modify—Unless a property association has covenants or restrictions prohibiting them, most homeowners are free to modify their home and property any way they see fit.
Potential Cons of Home Buying
Unlike renting, all home maintenance and repairs must be handled by the owners, and this is likely the biggest burden of homeownership. Landscaping, roofing, siding, plumbing, HVAC systems, appliances, etc., can break at any time, and many of these repairs don’t come cheap. Owners should have reserve funds available to handle these unexpected expenses.
Another potential downside to ownership is the lack of freedom to pick and move at any time like renters can – though renters often have leases and cannot move until the lease is up. Depending on the current marketplace, a home could take months or even years to sell. Eventually, owners are likely to want to sell and if it’s in a down housing market, they may find themselves facing an underwater mortgage, where more money is owed than the home’s equity or current market value.
If a move is in the future and you need a bit of guidance, contact a local real estate professional for more in-depth advice.