Mr. Smith and I lived together in an apartment before we bought a house together. Our first home is now a rental property. We’ve gone through a few changes in our housing situation over the years, and will probably need to move again someday in order to accommodate our growing family. For a long time, home ownership was held up as a milestone on your path to financial independence. It was expected of most adults to eventually get their own place. However, like the standard path to traditional “success,” the answer isn’t that simple now. Plenty of people happily live in rented accommodations that fit their housing and financial needs.
The most obvious benefit of buying a house is owning it. It is an asset with value, that can play a big role in securing yourself financially years down the line. Buying a home is becoming more flexible than you might imagine, too. People assume that they’ll be making the same mortgage payments for fifteen or thirty years, but options like refinancing your mortgage can cut down your monthly payments or shorten the duration of the mortgage. You can get a decent interest rate if you’ve already built up some equity in the property and have a decent credit score. You have more freedom with how you choose to live in and style your home, as well.
Mortgage interest is not the only cost of owning a home. The property is your responsibility, so you need to take care of regular maintenance, especially if you want it to keep it from decreasing in value. In addition to the mortgage, there are property taxes, utilities, repair costs, lawn maintenance, and insurance to deal with too. There is always a risk of financial loss if the house drops value over the years. It takes a lot of effort to maintain a home and for a lot of people, it can feel like it’s tying you down to one location.
Starting with the most obvious pro: renting a home is cheaper than buying one. You don’t have to worry about repairs and maintenance (for the most part), so your budget becomes much more predictable. You’re not exposed to the sometimes harsh realities of the real estate market. It’s easier to rent with poor credit. Most importantly for those looking to find a home now, it’s a lot easier to find a place to rent than it is to buy. With sites like RoomHere, you can easily compare different options and find one that’s right for you. With no long-term commitments, it’s the safer choice for those who aren’t ready to fully commit to a certain location. Finally, money otherwise spent on a down payment can be invested and given time to grow.
Naturally, when you rent a home, you don’t put anything towards ownership of the property. Monthly rent is only paying for temporary living costs with no long-term investment. The lower costs make it easier to build your savings, but many believe that money is better spent towards buying a physical asset like a house. Although paying a mortgage for thirty years may seem like a long time, at least there is an end to the payments. If you never purchase property, you will have to pay rent forever. One of the other big issues with renting is the lack of freedom. You have limited say on everything from the color of the walls to your service providers. I remember paying a special fee just to have a pet cat, back when we lived in an apartment.
Your occupation, lifestyle, and financial situation are all going to play a big role in figuring out which option works best for you. The important thing to remember with these types of decisions is to forget about conventional thinking – just throw it out the window! You need to figure out which option provides the most benefits that align with your specific goals.
For us, home ownership has worked well because Mr. Smith is very handy and we’ve always wanted to use rental property as a long-term investment. We will need to move eventually, but it would be really advantageous if we could make this three bedroom home work for as long as possible, and then use it as a second rental property. Yes, this is probably a complete pipe-dream, but I’m not going to dismiss it just yet. You’ll never succeed, if you don’t even give something a chance.
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