In today’s harsh economy, with the rising cost of living, many young adults wonder if it’s more affordable to rent a home or buy one instead. Unfortunately, while the cost of housing has risen astronomically over the past couple of decades, the same is valid for rental averages.
Both living options hold their own pros and cons, but this article delves into the financial factors of renting vs. buying a home to help you decide.
Buying A Home
When it comes to buying a home, you’ll need to be ready for a financial commitment that spans over 30-35 years at least. A mortgage loan can take even longer to pay off in some cases. With this, you will need to budget for mortgage loan repayments, property taxes, utilities, property insurance, and property maintenance.
This might seem like a lot of costs to consider, although, more often than not, it’s substantially more affordable to buy than to rent a property of the same value.
Buying a home is the best option for those who want stability, as you won’t be moving anytime soon. Moreover, there are also ways to reduce the costs of owning a home. For example, DIY maintenance can reduce maintenance costs while being energy-efficient will lower your power bill. What’s more, you could also consider a starter house instead of purchasing a forever home.
If you’re considering investing in a home, you can browse homes for sale in Toronto and other areas.
Renting A Home
It’s no secret that renting a property is expensive, with some millennials pointing out that rent costs blatantly exceed the costs of buying. The major downfall here is that at the end of the day, you won’t own anything.
However, there are some perks to renting. You won’t need to budget for property maintenance or home insurance, as these are the landlords’ responsibilities. In addition, you will avoid other costs like property taxes. But even so, you’ll still be paying utilities, and renters insurance is recommended.
Renting is the more realistic option for those who aren’t yet ready to buy. Moreover, if you don’t plan on staying in the same place for long, renting is also ideal.
Making A Decision
Whether you buy or rent, the best approach to making a confident decision is to create a budget. Determine how much you can afford, and if the idea of buying interests you, consider applying for pre-approval before you start house hunting.
That said, when creating your budget, add all the costs associated with renting and buying to compare affordability accurately. Once you’re relatively confident about your decision, you can rely on a professional realtor to help you find a property that compliments your budget and lifestyle needs.
While buying a home is typically the more affordable option, you will need a 20% down payment and a great credit score. On the other hand, renting might be more expensive over time, although this option holds a lot less responsibility.