First published: 19 January 2021 @ 6:20 pm
This article will give you the information you need on the differences and pros/cons of home ownership and home rental. Is it ultimately better to rent or own a home?
There are many people who rent homes for several reasons. For some, they are renters by choice. They enjoy the freedom of renting and the separation from a mortgage or paying someone else’s property taxes.
There are others who rent because they can’t afford to buy a home. Maybe they cannot receive approval for a mortgage or they simply don’t have the money to put down on a home for some period of time.
There is no right or wrong way to live, but you need to know the differences between owning and renting before you make your decision.
Things you need to consider are housing prices in housing market, opportunity cost and of course closing cost.
We all know that if you rent, you will never have your home ownership, but what about all of the other aspects?
Paying Your Own Way
If you rent your home, it is up to you to pay for it. You will have no mortgage payment and no property taxes. Your landlord pays for these expenses and repairs and maintenance on the property.
While some rental homes may come with an HVAC system, it is still up to you to pay for your utilities such as electricity, water and gas; in addition, homeowner’s insurance is still your responsibility too.
With home ownership, your monthly mortgage payment or escrow account will cover most of these costs, except for annual homeowner’s insurance.
Home ownership does come with a higher cost up front than renting, but it is more affordable over time because you won’t have any additional expenses each month; not only do renters pay for their homes every month, but their landlord also pays for these costs as well!
So really there is not a lot of difference between these two options in the long run. Especially when you look at how much money you get each month. There is one important difference if you are planning to buy a new car or get a new home during this time period.
Having an income stream from owning your own home will allow you more freedom to make those types of purchases while still being able to cover your housing costs each month.
The best way I can describe this point is by comparing apples and oranges – yes they both taste good but one has its skin on while the other has its skin off; both are great but different – I know it sounds weird – just go with me here!
Another thing that I want everyone to understand about renting vs owning is that renters usually have lower monthly payments than home ownership because they don’t have to pay a mortgage or property taxes.
But there is a catch the rent you pay each month for your home is all in one lump sum. If you want to pay off your home quicker, you can always choose to make an extra payment or two every year, but it’s up to you.
With home ownership, you pay your mortgage payment over time, with each monthly payment goes into interest and principal until you pay off the home completely; this allows you the option of paying off your mortgage sooner if you would like by making extra payments on your own.
The reason that home ownership offers more flexibility than renting is because most people will have at least two mortgages in their lifetime: one for their first home and another for their second home or investment property.
While renters will never own their homes, that doesn’t mean they own nothing! Renters can still buy vehicles, electronics, and other things they want.
It just means that renters may have to save up a little longer than homeowners before they can afford them because they don’t have an income stream from owning a home like homeowners do.
How much The Real Estate Taxes Cost?
Homeowners will have to pay real estate taxes in their homes, usually once per year (or twice per year depending on where you live).
Government usually set these taxes at 1% of the assessed value of the property each year and may increase slightly each year depending on where you live;
it all depends on how much the assessed value of your property has increased over time or if it decreased from previous years because of changes in market conditions such as a foreclosure, bankruptcy or just plain bad real estate decisions made by previous owners who lived there before you did!
Real estate taxes help pay for local services such as police protection and fire departments and schools if you rent instead of owning a home.
You may also be subject to special assessments depending on where you live; these special assessments cover emergency situations such as broken water mains, street lights out or broken sewers and may not show up on an annual tax bill but are still mandatory payments nonetheless!
Your monthly rent payment covers these costs so long as you pay it on time. However, if you don’t, then your landlord will be responsible for them. They will either ask for additional rent money from their tenants or they will pay the taxes themselves.
How’s The Home Insurance Work?
Your home will require insurance coverage just like your car does; it’s a must! When you rent, your landlord will most likely pay for your home’s insurance coverage.
However if you were to purchase a new home or move into a different rental property, you would be responsible for the cost of the insurance yourself.
Homeowners may have additional costs such as flood insurance depending on where they live and what type of coverage they carry on their homes. Federal Government requires an addition cost for flood insurance if you live in a flood zone and your homeowner’s policy doesn’t cover the insurance.
We recommend that you talk to your agent about this, as it may not be mandatory in some areas; some areas also have options for cheaper flood insurance than others depending on where you live!
How The Home Maintenance Work?
If you rent, it is up to your landlord to pay for any maintenance or repairs that are needed on the property, such as roofing, painting or even plumbing repairs. While there are many advantages to renting, there are also disadvantages which we will discuss later on in this article.
With home ownership, it is up to you to maintain and repair any issues that come up with your home. If something breaks down inside of your home then it is up to you to call someone out and get it fixed right away;
if something breaks outside of your home then it’s up to you again to make sure that someone comes out and fixes it quickly so that no further damage can occur from weathering conditions such as rain or snow!
This may sound like a pain but there are actually quite a few benefits from owning vs renting: First off, when something breaks inside of your home then all you have to do is make one phone call and get the problem fixed immediately instead of waiting around for someone else;
next when something breaks outside of your home then all you have to do is contact someone right away instead of trying fix the problem yourself because at least now everything will be handled quickly by professionals who know what they are doing!
I don’t know about anyone else but I don’t want my hard earned money going towards people who know nothing about fixing things around my house because I wouldn’t want them coming into my house either!
That just sounds ridiculous doesn’t it? It seems like every time I look around my house I see things broken or things that need fixed! The last thing I want to do is fix them myself or hire someone who doesn’t know what they are doing to fix them for me!
There are so many more benefits that come with owning your own home and they all come with an extra cost. With home ownership, you will be responsible for the cost of repairs, maintenance and other expenses that come up from time to time.
This is one of the reasons why many people choose to rent instead of buy a home.
Our website, HandyWork, provides a variety of financial tips and household ideas for you to follow so that you can make your life easier.
For more information about household tips, visit our website!