Renting can often seem like the better option. If something breaks, it’s not your problem; just call your landlord, and they will send the plumber out to fix that hot water heater or AC. If you’re like most Americans, you’re probably going to stay around the same place for a minimum of five years for work, family, friends, or all the above. With rent prices on the rise, is it really worth it? I am here to say honestly, probably not. Renting is an excellent option if you’re new to an area, just starting off on your own, or saving to buy your first home, but the first chance you get to buy a home take it. Below are just some of the reasons why owning is better than renting.
1: It’s yours.
100% that home is yours to do whatever you want (for the most part); the county or HOA may have restrictions or at the very least just make sure you get a permit, but that is more you can do than if you rented. If you wake up one Sunday morning and decide that you want to paint your walls lime green, have at it. Or, if on that same Sunday you want to go out and adopt a dog, you are free to jump in the car and head to the humane society. Owning gives you the freedom to truly add your flares to the property and make it your home in every way possible.
2: No rent increases
We have all lived through it. You go to renew your lease for another year, and it is all of a sudden $500 more expensive than it was last year. Same space, same size, same amenities, and in some cases, people are paying double what their previous rent was just a year ago. When purchasing a home with a fixed-rate mortgage, you know what your payment will be. Now, can taxes or insurance go up? Of course, a $10-$50 increase in your monthly payment is much less noticeable than a $500-$1000 increase and much easier to manage.
You are no longer paying for your landlord’s mortgage by buying a home, and you are now paying for your own. Real estate is a huge investment opportunity and buying your home is the first step. Each passing year as you continue to make your monthly payments, your mortgage amount goes down, and the equity you have in your home goes up. That means that each passing year, you will continue to get more and more back after the sale of your home. You will also get equity through appreciation from increased property values in many cases. When you rent, you are simply paying into nothing. You won’t get any of that money back when you leave or if the landlord sells the home.
4: It’s typically cheaper
In both situations, there will be some upfront costs. You need roughly 3.5%-5% down to purchase a home in many cases. If you live in Sarasota, you probably need around 2 and a half months’ rent to move into a property. But remember what that money is going towards. When renting, it is just going directly into your landlord’s bank account, as are your continued monthly payments. When buying a home, it is going directly towards the house. There will be some fees that go towards the closing costs and expenses of the home, but a good amount will be taken off the house’s listing price. To break it down, the simplest way to see this is that the average cost of rent currently in Florida is roughly $1,800 a month, while the average monthly mortgage payment in the state is $1,275. Over a $500 savings month to month when you purchase a home.
5: Improves and maintains your credit
Overall, renting really doesn’t help you in many ways. In almost all situations, rental payments don’t get reported to your credit report and won’t help improve your payment history no matter how long you’ve been renting. Do you need some credit history to buy a home? In many cases, yes. However, you can continue building and growing your credit with continued on-time payments. Mortgage payments are reported to your credit and will help improve and maintain your credit score and help make it stronger and more impressive over time.