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There are a few important differences between buying a home and renting one, so today we’d like to highlight the pros and cons of each, as well as the costs associated with both options.
Let’s begin with some of the expenses involved in purchasing a home. First, there’s the matter of the earnest money deposit (around 1% of the purchase price), as well as inspection costs, which tend to be between $300 and $500.
The down payment is the next major expense associated with buying a home. First-time homebuyers should expect this to cost between 3% to 5% of the home’s price, while those buying a second, third, or even fourth home should plan on putting down at least 20%. There’s also the matter of closing costs, which are around 3% of the purchase price.
As far as renting goes, one of the most significant initial expenses will be the security deposit. This usually matches the first month’s rent, which is another cost to expect. Pet owners should anticipate a pet deposit as well. Sometimes this is a straight fee and other times it can is a monthly expense.
Now that we’ve discussed some main expenses of each option, let’s move on to listing a few pros and cons.
The main advantage of homeownership is that the property becomes an asset that can grow in value based on appreciation or sweat equity. Homeowners also enjoy tax benefits, as well as the ability to rent out their property for additional income. Finally, owning a property allows you the freedom to do whatever you want with the property.
Renting, on the other hand, offers another kind of freedom. There are restrictions as to what can be done with your home, but all the maintenance is taken care of for you. Those with a very busy lifestyle may find this appealing.
So, what’s the best way to choose between these options? It all comes down to how long you’re planning on staying in the property and what goals you have. Renting is a great temporary solution, but ownership is better suited for those seeking a long-term place to live.
If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.