When you come out of college, you will need a place to live. But is it better to buy or rent a property?
Coming to the right decision is not always easy, so check out the following insightful advice.
You can then make the right decision for yourself.
The Costs Involved with Buying and Renting
While buying a home allows you to get a foothold on the property ladder and gain a potential investment for the future, purchasing your home comes with a lot of hidden expenses that can soon mount up.
On the other hand, when you rent, your landlord will typically handle the expenses that crop up over time. Also, you usually have nothing other than the actual rental amount to pay each month.
If you get a mortgage and purchase your home, you will have to budget for a down payment, closing costs, monthly outgoings like insurance, and long-term expenses like repairs.
Plus, your mortgage interest rate will depend on how good your financial standing is.
So, it is imperative that you spend time doing calculations so you can weigh up the pros and cons of renting versus buying.
The Advantages of Renting Your Home
There are advantages to both renting and owning a property. Although many of the pros of renting are financial-based, they are not limited solely to financial considerations.
Some of the key benefits of renting a home are:
- Rent is typically less expensive than paying a mortgage and the associated costs like utilities and property taxes.
- You do not have to find additional money to cover the costs of repairs and maintenance.
- Renting a property gives you flexibility because if you need to uproot and move because of work, for example, the worst consequence is simply breaking a lease early.
- Renting gives you peace of mind because if anything should happen to your home, such as damage from a hurricane, you have the freedom to simply up and leave.
The Advantages of Buying Your Home
Buying a home after college has its advantages too. Some of the key benefits are:
- You have a place to call your own and you can decorate and customize it as you wish.
- Owning a property is one of the best financial assets you can have as you build up equity and pay off your mortgage.
- Banks and other lenders perceive homeowners as more financially secure, which allows you to more easily get loans for something like a small business.
- You can decide to move away for a couple of years if you want and still have your home as an investment. You can even make it work to your advantage by renting the place out and renting somewhere yourself for cheaper, thus allowing you to pay off your mortgage earlier.
As mentioned above, the decision to buy or rent a home when you are just out of college should not solely be a financial decision.
Homes are emotional investments too.
At the end of the day, there is no right or wrong answer as to whether you should rent or buy. The decision needs to be based on your personal circumstances.
You should consider what makes financial sense but also do what simply feels right.
Make a list of the things that are important to you and weigh up the pros and cons for your specific situation so you can decide which option is best for you.