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Homeownership vs. Renting: What's better for you?

By (view all posts by Susan.Yoo-Lee)
at 6:00AM Wednesday February 27, 2013
under Personal Finance

Let me start off by saying, I am a new homeowner. After years of renting, my husband and I were able to finally save enough money to put a down payment on our new home.  The question we consistently asked ourselves throughout renting was if we were making the best decision for our future (financial future).

We wanted to feel like we were investing in something versus throwing our hard earned money away.  However, the constant lingering question in the back of our heads were the responsibility of owning something and if we would be able to handle it financially. We would be responsible for property taxes, all utilities, gardener, maintenance and any breakdowns in the home, and the list went on.

When we finally bought our home, within the first month, we ended up spending over $12,000 of our savings to replace the back roof, adding a vent to our tankless water heater inside our garage, getting rid of the shrubs in our backyard, pest control and taking care of a backup in our plumbing. Yes, this happened all at once, prompting my husband to want to put our home on the market.

After experiencing renting and owning, I've come up with the pros and cons of both:

PROS

Renting:

  1. You can move at anytime.
  2. Can be cheaper than paying a mortgage (Depends on region).
  3. Water and trash are usually paid for (depends on your agreement).
  4. No property taxes.
  5. All maintenance is taken care of.
Owning:
  1. Investing in your future. You can sell it for a profit in the future or rent it and get rental income.
  2. Mortgage interest is tax deductible.
  3. Pride of home ownership.
  4. Depending on where you live, mortgage can be cheaper or equal to your rent.
  5. Being able to renovate when you want to.
  6. Owning a pet.
CONS

Renting:

  1. You don't own the property that you live in.
  2. Cannot deduct an interest on your income taxes. California allows a credit for renters, but it's very minimal. It may depend on the state where you reside.
  3. Not having the freedom to do renovations to the home or updating simple things like paint, etc.
  4. Not being able to own pets in certain rentals.
Owning:
  1. You can't easily move unless your home is in a very good seller's market.  You have to either sell or rent your property.
  2. Property taxes. Depending on your area the taxes can be a lot.
  3. If something breaks, you fix it out of your pocket
  4. All utilities are paid by you.
  5. You have to maintain the home such as your yard, etc.
Looking at the pros and cons, what makes sense for your budget?  While renting seems like the more budget-friendly option without a lot of strings attached, owning seems like it would be a better investment option in the long run.

Do you own or rent?  From your experience, what would you say would be best for you and why? Please comment below.

(Source: Savings.com)