Have you been tossing around the idea of buying a house?
Being a homeowner might be a dream you've had for a long time, but is homeownership worth it?
This question right here is a crucial one to answer before you decide whether to continue renting or take the plunge of buying a home.
One thing is for sure - you shouldn't rush into homeownership until you're confident you're ready for it. With higher stakes and heightened responsibilities, owning a home is very different than renting a place to live.
As you toss this idea around, let us help you understand the differences between renting and owning. Here is a complete guide to help you learn more about both options, so you can make an informed decision that is best for you.
Use our app to meet like-minded people to co-own a home when you’re ready.
The Definition of Renting
Renting is a process you can use for many items in life. You can rent a movie, a book, or a tuxedo. You can rent a hotel room or vacation house. You can also rent a car, truck, or moving van.
Renting an apartment or house is also an option, so let's talk about what it means to rent a house or apartment.
When you rent a place to live, you agree to pay a fixed amount of money each week or month for the use of the property you select.
In return for the money you pay, you get to live in the home or apartment and use it the way you'd use a house if you owned it.
Renting a place to live doesn't give you the right to change anything in the unit and doesn't provide you with ownership rights in any way. It simply provides you with a place you can store your things in and live in as you wish.
You are the tenant when you rent a place, and the person who owns the property is the landlord. The landlord creates a list of rules and guidelines you must follow, and you agree to these when you sign the contract (lease) to rent the unit.
In other words, you have responsibilities as a tenant of a rental property to the landlord who owns the property.
The Definition of Owning
Owning the place you live in is very different than renting. When you own your home, the house is yours. You can use the house however you'd like, and you can make changes to the house as needed.
Additionally, you are the owner of the house, which means you also pay for the repairs, updates, and any maintenance that the home needs. There is no landlord to call when problems arise.
Owning a home offers a lot of great benefits but also comes with a lot of demands and responsibilities.
Benefits of Renting
Now that you have a good understanding of both options, let's discuss the benefits of renting a place to live. There are four significant benefits of renting, and here they are.
One, there is no long-term commitment required for renting. If you aren't sure where you want to live and are possibly even thinking about moving, you probably wouldn't want to be tied down to a home.
Renting allows you to live somewhere without committing to living there for longer than a year. You can rent places by the month if you really want to avoid commitments.
Two, someone else is responsible for fixing anything that breaks. When your refrigerator stops working, or your furnace quits running, guess what? You call your landlord, and he or she arranges for the repairs and pays the bill.
Three, you'll have fewer expenses when renting. Renting requires paying a monthly fee for the property and some utility bills in most cases, but that's all.
Finally, it costs less to rent in most situations. If you're looking for the most affordable way to live, renting is likely your best option. It typically costs less in all to rent rather than to own.
Benefits of Owning
Next, let's talk about the benefits you experience by owning your home. Here are four benefits worth mentioning.
One, owning allows you to build equity in your house. Your lender applies a portion of each mortgage payment to the principal balance on your loan. Little by little, this allows you to build equity in the home.
Two, you can make money by owning a house from appreciation in value. Over time, house values usually increase. Lenders call this house appreciation, and it's a huge benefit for you.
Three, you could qualify for some really great tax breaks. Homeowners can write off the interest they pay on their loans, closing costs, and other types of expenses. The result is paying lower taxes just because you own a home.
Lastly, owning a house provides you with more freedom. Do you want to have a purple kitchen? As a homeowner, you can make this happen, because you're free to make any changes you deem worthwhile.
Home Ownership: What are the Factors to Consider?
As you begin learning more about the differences between renting and owning, as well as the benefits of each, you should understand some of the main factors you should consider as you decide which route to take.
Here are five factors to thoroughly consider and evaluate as you make the decision to be a homeowner or a renter:
1. Your Financial Status
Renting does not require having a big savings account, whereas taking the plunge to buy a house will require some cash. Do you have money to use to pay for the closing costs and down payment?
Do you have a good job history? Are your debts paid in full? If you bought a house, do you have a steady income to pay for it?
What about your credit? Have you checked it lately? You'll need a decent score if you want to get a loan, so you might want to consider this too, as you'll need to get pre-approved before going any further.
If you're in good financial shape, buying a house is a great choice. If you need some time to work on your credit or finances, you may want to stick with renting for a while.
2. How Long You Want to Own the Property
What are your plans? Do you want to stay in one place for at least three to five years, or are you strongly considering moving out of town?
For homeownership to be a wise move, you should make sure you can commit to it long-term. Committing for three to five years is the minimum amount of time, and it's actually better if you can commit to more time than this.
Property taxes are not something you can avoid when you're a homeowner, but property tax rates are very different from city to city. Even within a city, there are big differences in tax bills depending on the community where you reside.
Evaluating property tax amounts in the area you're looking at is a great step to take when contemplating buying a home.
4. Maintenance Issues
Next, are you ready to handle all your own repairs and maintenance? You can minimize the repairs and maintenance you'd have when owning a home by choosing a newer house, but you'll never eliminate all repair and maintenance problems.
Problems will pop up from time to time, and you'll need to plan for these things. Having an emergency fund is a great idea, as this offers a way to pay for unexpected repairs.
5. Cost of Housing in Your Neighborhood
Finally, take a good look at the cost of housing in the area where you'd like to live. When you do this, you might find that owning a house is more affordable than you expected, or you might find just the opposite.
If you aren't sure about the costs of homes, start looking them up. You'll quickly find out if you can afford to buy a house or not.
Which Is Right for You?
As you can now see, both options have some really great benefits. You can also probably see that no two situations are the same.
Deciding for yourself requires putting forth some effort thinking about the options you have and the best choice for yourself. What's right for you might not be right for everyone.
Is Home Ownership Worth It?
After reading this article, have you determined the answer to this question: "Is homeownership worth it?"
Homeownership is worth it in many situations, but taking the time to analyze your personal situation is always a crucial step. By using Cher, homeownership is made simpler than renting. That is what we are trying to achieve.
One, there is flexible commitment required for co-owning with Cher. If you aren't sure where you want to live and are possibly even thinking about moving, you probably wouldn't want to be tied down to a home, but with Cher, you can. We are making this flexible.
If you decide that owning a home is the right choice for you, contact us. We specialize in helping people become homeowners, and we can help you too!