Renting Versus Owning A Home Today
By Cassandra Riddick.
Cassandra is one of the Black Family Magazine writers. She is based in Washington D.C. and loves cats.
Homeownership is your surefire way to building wealth, but can you afford it? Many factors go into purchasing a home and taking care of one.
Let’s first look at the advantages and disadvantages of both scenarios.
Purchasing a Home
PROS | 
| CONS |
Property value appreciates
and builds equity | Possibility of loss of equity due
to real estate downturns |
Tax benefits | Property taxes are your
responsibility |
Freedom to change the interior
and exterior décor | Maintenance and utility costs
including heat, hot water and
gas are your responsibility |
Boosts credit rating and buying
power if in good standing | Possibility of foreclosure and long
term credit problems if accounts
are in poor standing |
| Harder to move spontaneously |
Renting a Home
PROS |
| CONS |
Little or no responsibility for
maintenance | No equity building opportunity |
Easy to move | | No tax benefits |
| | No control over rent increases;
building being sold, or eviction |
| | Less freedom to change interior
décor and/or no freedom to
change the exterior décor |
| | Reliance upon property manager
to fix problems and maintain
building |
Once you evaluate which types of freedoms you want, you can better determine which scenario works best for your lifestyle. If you opt to rent, just understand that in some cities, the amount of money you pay monthly for rent, could be more than or equivalent to a monthly mortgage. And, if that is the case, your money would undoubtedly be more wisely invested into property you own, rather than into property somebody else owns.
However, there are additional costs besides mortgage that come with buying a home such as…
- Property Taxes
Tax rates usually depend on the city, school district and neighborhood. Usually, the better the neighborhood, the higher the tax.
- Home/Hazard Insurance
This is required for all homeowners.
- Utilities
Electric, heat, hot water and gas are added expenses.
- Maintenance
Anything that needs repair and general upkeep is now your responsibility, from plumbing problems to landscaping to roof repair.
- Home Owner Association (HOA) Fee
This usually applies to residents in organized complexes such as town home communities, condos and cooperative buildings. This monthly fee usually pays for trash and snow removal and maintenance of the common grounds. In cooperatives (or co-ops), property tax and maintenance fees are usually rolled into one monthly payment.
The best way to figure out if you should rent or buy is by assessing your goals and evaluating your personal financial situation. Financial calculators such as the ones available atFannie Mae are great ways to determine how much home you can afford, what your monthly mortgage would be and how much money you need to save. The first step is to become informed. Once you are armed with the financial information to fit your own situation, you can begin making plans towards your goals.
Back
to top
Related...
Home
Related Links