Deciding whether to rent or buy is one of the biggest financial decisions you will make in your lifetime. While there are several factors that go into this decision, there are some pros and cons for each that you should consider. David Sant, the VP of Marketing for Cyprus Credit Union, gives us the skinny on selecting a home.
Pros of renting
• More freedom: if you lose your job, or end up hating the neighborhood, you can quickly pack up and move to a new location that better suits your needs.
• Build credit: if you have poor or little credit, renting is a great way to improve your score. By making consistent and on time payments, you can raise your credit score.
• Bonus Amenities: Many apartment communities offer bonuses to their tenants such as a pool, gym, outdoor entertaining space and trash services which are already included in your rent.
Cons of renting
• Rent fluctuation: Your landlord can increase your rent each time your lease is up. If your lease is month-to-month, you could deal with your rent changing every 30 days.
• Limited customizing: If you are able to make any changes or improvements to a rental, they only benefit the owner of the property. You won`t see any return on the investment.
• Landlord rules: Even though you`re the one living there, you still have to follow the rules and regulations of the landlord such as whether or not pets are allowed or mandatory quiet hours etc.
Pros of buying
• Builds equity: Equity is the amount of your home that you actually own . It`s what you would walk away with when you sell your home and pay back the mortgage loan.
• Tax benefits: You can write off mortgage interest and property taxes when tax time rolls around. These benefits are always available as long as you are the owner.
• Fixed payments: Rent payments have the chance of going up at the end of the lease. With a fixed-rate mortgage, you`ll know exactly how much you`ll be paying.
Cons of buying
• More Responsibility: As a renter, if a pipe bursts or the furnace goes out, you would make a call to your landlord and the problem would be taken care of. Now, it`s up to you to take care of all of the maintenance around the house and any costs associated with them.
• Unexpected Costs: You can do all of your homework and still come across expenses you didn`t plan for when you purchase a home.
• Less Flexibility: To leave your home, you will either have to sell your home or rent it out, both of which could potentially include additional stress, expenses and aggravation.
Find more helpful suggestions at cypruscu.com.