Everyone of us has been dreaming of his own house. Sometimes our dreams come true, but some people believe that living in a rented apartment is better than owning a house. I think that the advantages of your personal house are much bigger than of a rented apartment and even financially it will be better if there were not so many extra fees and other payments that are coming to you with every passing year.
The unquestionable advantage is that you are not paying money to the unknown person and they will never be back (in the form of a flat or a house). Still many people do not agree with this statement and say that “throwing money away” is too rough and does not correspond to the whole situation and extra expenses do not bring much pleasure: People explain that paying rent is throwing money away. Of course, they don’t mean that literally. You’re getting something for that money (a place to live). But with a mortgage you’re building equity, right? Doesn’t that fundamentally make more sense than renting? No. “Building equity” just means turning some of your money into a house. That’s one of many ways you could invest your money.”
Unfortunately the majority of young people held this position finding out that renting is much easier than buying a house.
But when you are the owner you do not depend on any circumstances as you are depending living in apartment.
Being an owner you may choose what kind of house do you what, what color of walls, which furniture and so on, living on the rented apartment you have to choose from the variants you are suggested and sometimes circumstances turn in such a way that you need just to live somewhere and there is no question about choosing you get just what is suggested. Sometimes the owners of the flat put you behind the fact that you ought to leave the apartment earlier than the contract is finished, because of… it can be everything, the reasons are numerous, the fact is that in your own house you will never meet to such a problem as you are dependent only from your own circumstances but not from the other’s people.
Another advantage is connected with pets. If you have a cat or a dog it will be more difficult to find apartment where the owners would not be against your pet. In your personal house you can become also the owner of even crocodile or some other exotic pets.
|Tax write-off||No tax write-off|
|You can upgrade your home as you see fit||Need permission to make any changes|
|Build equity in your home as value appreciates||Your money goes toward the landlords equity|
|Control of loan payment options||Rent can increase periodically|
|Pride of homeownership||You have no ownership|
I think that it is one of the most reasonable things that you feel safe and protected in your house. My home is my castle.
Whether to rent or to buy the place in which you live is a major decision. It doesn’t just affect how much money you have left at the end of the month; it also affects your lifestyle and the size of the savings you accumulate over the years. Every day, people buy homes when financially they’d be better off renting, because it’s important to them to have a place to put down roots and because they see owning a home as an investment that can grow and as a source of tax deductions. Similarly, people rent all the time for the flexibility and minimal responsibility it offers, even though they’d amass a larger net worth over time if they bought a place.
Of the two options, the bias often veers towards ownership: It's a big business for everyone from mortgage lenders to real estate agents to home improvement stores, so we are bombarded with the message that being a homeowner is the key to happiness and part of the American dream. But owning isn’t universally better than renting, nor is renting always simpler than owning. Consider the pros and cons of each to figure out whether renting or owning is best for you.
Stability vs. Flexibility
Home ownership brings intangible benefits such as a sense of stability, belonging to a community and pride of ownership. However, it’s not good for restless or nomadic types. Real estate is the original illiquid asset. You might not be able to sell when you want if the housing market is down, and even if it’s up, there are significant transaction costs when you sell. Changing your mind about where you want to live is far more expensive when you own.
Renting means you can move without penalty each time your lease ends, but it also means you could have to move suddenly if your landlord decides to sell the property, turn your apartment complex into condos or bump up the rent by more than you can afford. (To deal with such issues, see Easy Ways To Cut Rental Costs.)
The biggest myth about renting is that you’re "throwing away money" every month. Not so. First of all, you need a place to live, and that always costs money, in one way or another. Second, while it’s true that you aren’t building equity with monthly rent payments, you also aren’t building equity with much of the money you’ll put into owning a house. The overall cost of home ownership tends to be higher than the overall cost of renting, even if the monthly mortgage payment is similar to (or lower than) the monthly cost to rent.
Here are some expenses you’ll be “throwing away money” on as a homeowner that you don’t have to pay as a renter:
Perhaps the biggest throw-away expense is mortgage interest, which can make up nearly all of your monthly payment in the early years of a long-term mortgage.Take this typical scenario: You borrow $100,000 at 4% for 30 years. Your first monthly payment will be $477.42, of which $333.33 is interest and $144.08 is principal. It will be about 13 years before more of your monthly payment goes toward principal than toward interest, and in total, you’ll lose $71,869.51 in interest (though, admittedly, you'll recoup some of that in tax deductions). (Learn more in How To Buy Your First Home: A Step By Step Tutorial.)
Even renovation projects don’t often increase the value of your home by more than what you spend on them. On average, you’ll get back 64 cents for every dollar you shell out on a home improvement project, according to Remodeling magazine’s 2017 Cost vs. Value Report. The projects that recoup the most are not glamorous things you’ll be excited about doing, either: The best return (and the only one on Remodeling's list that returns a higher value than its cost) comes from putting loose-fill insulation in an attic. Then there's replacing your front door with a new, steel entry door, on which you’ll almost about break even.
Once you add up all these costs, you might find that you’re better off financially by renting and investing the other money you would have put into a home into a retirement account. (For more on planning for your future, read Top Rules of Thumb for Retirement Savings.)
When you rent, you know exactly how much you’re going to spend on housing each month. When you own, you might pay nothing more than your mortgage and regular bills one month, and an additional $12,000 on a new roof the next (which homeowners' insurance may or may not cover). But you’ll never have to pay to replace your roof when you rent. Your monthly, home-related expenses, such as renter's insurance, tend to be more predictable. (See 6 Good Reasons To Get Renter's Insurance).
As a renter, though, you do face unpredictable rent increases each time your lease is up for renewal, unless you live in a city with rent control and your apartment is covered by it. If you live in a desirable part of town, rent increases can be steep, while if you get a fixed-rate mortgage, your monthly house payments will never increase (though property taxes and insurance premiums probably will). Learn more on the former in Your Property Tax Assessment: What Does It Mean?)
Other Ownership Myths
While home ownership is often touted as a way to build wealth, your home can lose value. Lots of value. The acceptable neighborhood you moved in could decline. A major employer can leave the area, causing a significant population decline and a surplus of housing, or there could be a residential construction boom – either of which keep prices down. You might buy a house for $200,000 tomorrow and in 30 years find that it’s still worth $200,000, meaning you’ve lost money after inflation.
Another bit of misleading conventional wisdom: Get a mortgage to get the tax deduction. True, the home mortgage interest deduction reduces your out-of-pocket expenses for mortgage interest early in your loan term (and the property tax deduction reduces property taxes), as long as you’re itemizing. But tax deductions are not a reason to buy a house. Here’s why: For every $1 you spend in interest, you might save 25¢ on your tax bill. You’re not coming out ahead. What’s more, as you pay down your mortgage and the proportion of your payment that covers interest decreases, so will the tax break.
Of course, renters get no mortgage tax deduction at all. But they can take the standard deduction that's available to all taxpayers.
Do you like having your evenings and weekends to use as you please? Do you work long hours or travel frequently? If so, the time commitment that comes with home ownership might be more than you want to take on. There are always projects around the house that you will need or want to take care of, from finding a plumber to replace a rusted out pipe to repainting the bedroom to mowing the lawn. If you live in a community with a homeowners association, the HOA might take many of these home ownership chores off your plate for an additional cost of a few hundred dollars a month. But beware the headaches that association membership can entail. (Learn more in 9 Things You Need to Know About Homeowners Associations.)
If you rent, your landlord will take care of all the repairs and maintenance – though of course they may not be done as quickly or as well as you would like.
The Bottom Line
Which option is best for you isn’t just about money; it’s also about comfort and your vision for your life. Ignore people who tell you that owning always makes more sense in the long run, that renting is throwing away money, or that it makes more sense to buy if your monthly mortgage payment would be the same or less than your monthly rent payment. Housing markets and life circumstances are too varied to make blanket statements like these.
Still, despite the added expense and extra chores associated with owning a home, many people chose it over renting: It provides a more permanent place to raise children in. Or it offers the only way to have, or create, the sort of residence they want.
Ultimately, the decision to rent or to own is not just financial – it’s also emotional.