Is it better to buy a home or rent?

Low to moderate income buyers are able to purchase an affordable home; and many studies show that home ownership most likely will be cheaper and more beneficial than renting in the long run. But for some people, renting may better fit their lifestyle and situation.

So is buying a home the right thing for low to moderate income buyers?

The Advantages and Disadvantages of Homeownership:

• It is cheaper to pay a mortgage than to pay rent. Usually true. However, it takes years before your mortgage payment starts to significantly pay down the actual loan rather than just go toward interest fees. In the end, you will own your home - you will never own your rental.
• A good apartment can be hard to find in your area. In some areas of the country, housing stock for sale is tight, also.
• Fixed interest rates. If you take a fixed interest rate mortgage, your monthly mortgage payment will be the same today as it will be at the end of the mortgage. Rents will go up.
• Home appreciation. If you buy in the right location, the worth of your home will most likely rise. According to a CNBC report, between 1940 and 2000, and after allowing for inflation, average home prices in the USA quadrupled.
• Privacy. You don’t have to hear loud music or yelling or noises from the other side of the wall.
• No pet fees. You can have any size or type of pet you want without paying a pet fee, as long as you aren’t breaking any local ordinances (no tigers or alligators). Renters usually have to pay a fee for their pets.
• You can decorate all you want. If your child wants Spiderman wallpaper, they can have Spiderman wallpaper (unless you told him no).
• You are your own landlord and you decide who can live with you or not. But you are also your own maintenance staff.
• Fewer fees to worry about. No having to pay high late payment fees, or fees to add on another household member, or large security deposit fees. With a mortgage, there usually will be late fees ranging from 3 to 5 percent of your monthly mortgage payment if you are more than 15 days late, which still, most likely, will be lower than the late fee charged on a rent payment.
• You will provide stability for your children. Your family won’t need to move in twelve months or sign a new lease that could be for higher rent. You will also have something to pass on to your children.

Advantages and Disadvantages of Renting a Home:

• No major maintenance costs. You don’t have to pay for repairs from normal wear and tear. If the furnace goes out or the dishwasher stopped working, you don’t have to pay to replace or repair, which can be expensive. But, you are at the mercy of your landlord. Hopefully, the problem will be fixed in a timely manner. But it’s a headache to go without hot water for a week; waiting on maintenance to get to you.
• No real estate taxes. You pay no property taxes because you don’t own the property.
• Utility bills can be smaller. The smaller the home, the cheaper it is to heat and light it. Many apartment complexes pay the water and sewer bills also. For your own home, you are responsible for all the utilities.
• Moving is easier. You can move at the end of the lease if you want. You cannot easily move from the house you own. If you decide to sell, it could take months and a possible loss on your investment.
• No worries about the value of your property decreasing. If you don’t own the property, you won’t have to face the possibility of your property losing value.
• Insurance payments are smaller. Homeowners insurance premiums are more costly than renters. Homeowner’s insurance has to include coverage for damages of the structure, loss of personal property, liability against any possible lawsuits and in some areas, flood insurance. Renters insurance covers loss of personal belongings and is cheaper because it covers less.