Archive for the ‘own vs. rent’ Category

Owning vs. Renting: 56 Reasons…

Sunday, February 17th, 2013

Just in case you needed more reasons as to why it is advantageous to buy a home, here is an extensive list about the advantages and disadvantages of owning and renting…

Rent Advantages

  • May be cheaper than a mortgage payment
  • Fewer (if any) maintenance costs
  • No down payment required (less deposit)
  • No real estate taxes (renters insurance optional)
  • Less stress (who cares, it’s not yours!)
  • Freedom to move or downsize when necessary
  • No risk of home price depreciation
  • Some utility bills may be included
  • “Free” amenities such as pool, gym, security
  • Money can be used for other, more profitable investments
  • Can’t be foreclosed on (but you can be kicked out at the end of your lease if the owner is foreclosed upon)

Rent Disadvantages

  • Rental payment may exceed monthly cost of mortgage
  • No ownership or wealth creation
  • Payments never stop when renting
  • Rent will rise over time
  • Must deal with a landlord or management company
  • No tax benefits
  • Rules, regulations, and limitations
  • More temporary, less stability
  • Always at the mercy of the property owner
  • Pets may not be allowed

Ownership Advantages

  • You can build home equity and wealth
  • Status- Status-Status
  • Sizable tax deductions possible
  • Your space, your rules (pets welcome)
  • Ability to remodel, expand, tear down
  • Pride of ownership (social status, accomplishment)
  • Potentially better for children, family structure
  • Mortgage can improve your credit history/score
  • Ability to borrow against your home (HELOC or cash-out)
  • No more monthly payments once mortgage paid off
  • Fixed payments (if you choose a fixed mortgage)
  • Mortgages are the cheapest loans available
  • No landlord
  • Can exclude capital gains when you sell (partially)
  • Inflation hedge
  • Can rent out to others
  • Can sell and use proceeds for bigger/better home
  • Retirement nest egg
  • It’s the American Dream!

Ownership Disadvantages

  • Home prices may lose value
  • Could overpay for your property
  • Obtaining a mortgage (and finding a home) is a hassle
  • Not everyone qualifies for a mortgage
  • You must pay taxes and homeowners insurance
  • Total housing payment can be more expensive
  • Mortgage payment can rise (if an ARM)
  • Sizable down payment necessary
  • Maintenance costs can be excessive
  • Pricey HOA dues (if applicable)
  • You’re “stuck” in a home (long-term commitment)
  • Increased liability and responsibility
  • Transactional costs of buying and selling
  • Ownership is stressful!
  • Taxes and insurance generally rise
  • Your home can be damaged or destroyed (and not fully insured)
  • Can be foreclosed on and lose your home

 

The preceding post was written and shared with permission by Dan Dobbs, of Capital Mortgage Services. He can be reached at DanDobbs6@gmail.com, or http://danieldobbs.org. Or call him at 949-250-3981. DRE#00986886, NMLS# 307631


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