"To buy or not to buy, that is the question." Every adult eventually finds themselves asking this question. The correct answer is dependent on a number of factors in one's life. A person's financial situation, lifestyle, employment and family dynamic all play a part in determining if it is the right time to buy versus rent. When you are set on the idea of buying, it is best to start planning ahead of time. Tell your friends and family early on in the process to gain their support. If you need an agent who understands the obstacles you will face, give Stewart a call at (719)232-6734 or email him at firstname.lastname@example.org.
Pros of Renting
One of the most common reasons people decide to rent is the fact that it's flexible. Renting allows you to move on to a different location after a lease expires. There is no home to sell or realtor to hire. Although this flexible lifestyle does not build equity, it is ideal for someone who is not sure where they will be in a year or two.
No Property Tax or Homeowners Insurance:
There is also no need to pay property taxes. The second highest expense for most homeowners is property tax, just behind the mortgage payment. The third highest expense is homeowners insurance. The cost of homeowners insurance and property tax keep many people from buying their own home. But take a second and think about it; if the landlord has to pay these expenses, doesn't it make sense that the cost is being included in the rent? Many renters don't realize it, but they may be inadvertently paying for the landlord's insurance and property taxes.
Renting also does away with the responsibility of maintaining the property. There's no need to replace the roof or fix the leaky pipes! Repairs are passed on to the landlord or property maintenance company. This "convenience," however, is sometimes the opposite of convenient when you rely on others to fix your home.
Pros of Buying
No Payment Hikes:
When you buy a home there is a good chance you will have a fixed-rate. This means that your mortgage payment will not increase over the life of the loan. Having the security in knowing that your monthly payment will stay the same year after year is a serious comfort for homeowners. It's very common for rental units to have a payment increase after a lease expires, especially in a city like Denver or Colorado Springs where rent has increased drastically in the past few years.
Making A House Your Home:
When you own a home, you have the ability to do what you want with it. Want to knock down a wall? Go for it! Want to paint the wall bright yellow? Go for it! A home is where you make memories and having the ability to make your home the way you want is one of the biggest benefits of home-ownership. When you rent, let's just say you are not able to paint walls bright yellow!
Everytime you make a mortgage payment you earn equity! As the price of your home increases, your mortgage goes down and your equity rises. If you pay downyour mortgage over 5 years and your home appreciates well, you will have a nice pile of equity to use as you see fit. You can use this equity to refinance your home, move to anicer home, or simply leave it alone and watch it build over time!
Cons of Renting
In Colorado rent has been rising surprisingly fast for years. When a lease expires, the landlord has the option to raise the rent as high as they want. This makes it difficult for renters to plan for future expenses when they don't know what they will be paying when their lease expires. If you don't agree with the new lease, you will have to find a new place to live. This incurs more expense, plus the effort it takes to search for a new home and move.
Most leases come with a deadline. After the deadline, landlords have the option to increase rent, sell the property or bring in new tenants. Once the lease is up, there is no guarantee that you will be able to renew. There is no certain future for a renter, which makes it difficult to make long term plans.
One of the most frustrating aspects of renting is knowing that each payment is going straight to the landlord. When you rent, you don't have any equity or ownership in the property. Realizing that every payment you make is gone for good causes most renters to consider buying. Renting always costs more in the long run. Picture an individual that rents for 10 years, as opposed to an individual who pays down their mortgage for 10 years. The person who is paying down their mortgage will have ownership and a nice hunk of equity, while the renter will have been paying someone else for 10 years and have no equity.
Cons of Buying:
As a homeowner you are responsible for maintaining your property. This means it's up to you to replace broken windows, or mow the lawn every week. Homeowners insurance usually helps with major issues such as replacing the roof, but the rest is up to you. While this can be time consuming, owning the home allows you to have freedom in the way you replace or repair problems in your home. It is also done on your schedule and does not keep you waiting on a landlord.
When you buy a home the mortgage company will typically ask for a down payment. This is usually around 20% of the purchase price. Although this may be a large expense, there are down payment assistance programs that can help. The best way to find out is to speak with a mortgage lender.
Selling A Home:
Selling a home can be a pain if the need arises. If your home needs some love and care, you will have to come up with the money to make repairs. Selling usually takes a couple months of preparation and planning. It's important to do it right to make the most out of your initial investment. Getting advice from a realtor is a good idea.
Author:Stewart Hazelton Phone: 719-232-6734 Dated: June 1st 2016 Views: 305 About Stewart: When working with a Berkshire Hathaway realtor, you can expect the utmost professionalism and dedica...
View our latest blog posts in your RSS reader. Click here to access.
Berkshire Hathaway is a leader in the luxury market. We are the Number 1 company in Barron’s annual ranking of the world’s most respected companies, and stand at Number 8 in Fortune magazine’s “50 Most Admired Companies” survey. Currently, Berkshire Hathaway sits at Number 18 in Harris Interactive reputation study of the 60 Most Visible Companies.
Plain and simple, Berkshire Hathaway seeks value. Its approach is to acquire companies with great brands, great products, strong leadership, and hold them for the long term. The company, with its diverse holdings, is said to cover consumers “head to toe”. Real estate fits perfectly into this strategy.
“When people are making the decision of the magnitude of buying a house, it’s the biggest decision a great many families will ever make. They want to know who they’re working with and we think that the Berkshire Hathaway name will be reassuring to many of those people.” - Warren Buffet, Chairman and CEO, Berkshire Hathaway Inc.