Home prices are through the roof right now. In fact, home prices are up more than 13% over the past year. These dramatic price spikes have reignited the rent or buy a house debate. Some prospective first-time homebuyers cannot afford prices at this level.
On the other hand, many are taking advantage of record-low interest rates. Cheap financing makes ownership more plausible than it would have been otherwise.
Read on for a guide to the great rent vs buy debate. Explore reasons to rent a house or buy depending on your personal situation.
Reasons to Buy a House
There are so many great reasons to buy a house. The most important is putting your money towards a tangible asset. As you pay down the mortgage, your net worth is increasing.
Your equity stake in the home grows each month. You can liquidate this equity during a home refinance or sale.
This reason is especially important during this price spike. Homeowners are riding the waves to rapidly grow their net worth. This guide here explains how you can pay down your house faster and accumulate even more wealth.
There are also tax benefits to homeownership. You can deduct property taxes and mortgage interest to lower your tax liability. There is a tax benefit at both the federal and state level.
Homeowners also enjoy creative control over their homes. They can make whatever modifications they like.
You can tear down a wall or add an extension. Renters are very limited in the modifications they can make, if any.
Reasons to Rent a House
While homeownership is attractive, there are still many reasons to rent a house. Renters have more flexibility than homeowners.
They are not locked into a 15 or 30-year mortgage commitment. If they get tired of a house or location, it is easy for them to move on. Typically, renters are signing one-year lease agreements and are free to leave when it ends.
Another benefit is that renters are not responsible for major home repairs. Nothing is worse than an unexpected roof leak or appliance failure.
As a homeowner, you are on the hook for thousands of dollars to fix issues. Alternatively, renters are under no obligation to make repairs. They can contact their landlord to handle the issue for them.
Renters are also not susceptible to pricing bubbles. In 2008, many people were caught in a housing crisis. They purchased homes at their price peak and were left underwater when the housing bubble collapsed.
There are some financial benefits to renting. Besides saving on maintenance costs, you also do not need a down payment. Lastly, renter’s insurance is a lot cheaper than homeowner’s insurance.
Should You Rent or Buy a House?
This is such a tough question for many home shoppers. There are pros and cons to both sides of the debate. Renters have more flexibility while homeowners are building equity every month.
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