The common question many have today, “is it better to rent or to own”? Renting for many, is usually the cheaper alternative in the majority of cities across the country today. So read on and see if renting is right for you. Maybe owning a home is not the best decision for your immediate future.
upfront costs will be...
One of the biggest differences between the two, are the upfront costs associated with buying a home. When you purchase a home, you will have more expenses before you actually get your keys. Although many buyers believe that they must put 20% down, lower levels are still attainable.
But there are still more fees included. There are closing costs which include title fees, home-owners associations dues, and sometimes miscellaneous fees. If you're purchasing a $200,000 home, you might need to put down 10k.
renting is a lower cost...
And renting will offer a much lower cost alternative. When you sign your lease and move in, usually you're just responsible for the first month’s rent, a security deposit, and possibly a nominal administration fee. Although a security deposit can be as much as one month’s rent, it still doesn’t come close to what you will need to put down for the purchase of a home.
Monthly expenses may differ between the two as well. Your rent will most likely be the same for the entire lease term, and it will be due on the same date as well. Your rent can only be altered after your lease has been completed.
But owning a home may not exactly be so smooth. There are adjustable rate mortgages (ARM) that may influence how much your monthly payments are. And don’t forget about property taxes and homeowners association dues, which all can change on a yearly basis.
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Then there are the other expenses which are unpredictable. All repairs will need to be paid by the homeowner. Termite or foundation problems will be the responsibility of the owner.
However, it’s usually the landlords/property management’s responsibility for any repairs to the rental. That sure is nice when something needs to be repaired and all you have to do is pick up the phone and make a call. So whether your a/c has stopped working, your faucets are leaking, or your door knob is loose, you won’t be responsible for anything.
And when it comes to renting, all expenses should be spelled out exactly in the contract. From the rent to the security deposit, to the late fees that may be applied, residents know exactly what expenses to expect. Even an early lease termination fee will be outlined in the contract.
So in the end, renting an apartment will surely have lower upfront costs, and you won’t have any unnecessary expenses. Many people will say that renting is like throwing money down the drain. But purchasing a home isn’t for everyone. High upfront costs and repairs can make owning a home a nightmare.