What are the positives and negatives of renting versus owning a home in Flagstaff?
Homeownership is a rite of passage many of us dream of. Owning a home means putting down roots and having a space that is truly yours. It’s a significant moment of your life when you finally own a home. For many people, owning a home is the fulfillment of the American dream. Purchasing a home is one of the biggest financial decisions you will make in your life. So, before you decide to buy, carefully consider the pros and cons of homeownership.
When you think about buying a home, many questions will come to mind. Do I really need to buy a home? Is my income going to grow? Will I stay in a home long enough to benefit from the purchase? Have I got enough money saved? Am I ready for the responsibility? Buying a home is a major financial move, so you’re wise to look carefully at the positive and negative aspects. Information in this chapter will help you examine the pros and cons of owning a home, based on your personal desires, future plans, and general financial position.
Renting versus buying: What is better?
The age-old question is it better to rent or buy a home? There really isn’t a right answer to this question. It depends on you, your situation, and future plans. It’s not a clear cut yes or no answer. If you’re debating whether or not you should rent or buy a home there are advantages and disadvantages to consider and some questions you need to ask yourself:
How long will you be living in the home?
If you don’t plan on staying in a home or city for more than 5 years then renting probably makes more sense for you. However, if you’re not going anywhere anytime soon then buying is cheaper than renting in the long run.
Do you make enough money to be a homeowner?
As a property owner not only means you’ll now have a monthly mortgage payment to worry about. As an owner you’re responsible for anything that needs to be repaired. If a pipe busts you can’t just call your landlord and have it fixed for free. You’ll have to hire a professional to make any repairs. There are homeowners associations, mortgage insurance, homeowners insurance, and property taxes. The various fees all add up and can be quite costly in some cases.
The advantages and disadvantages of owning a home in Flagstaff
Before buying a home, it’s important to consider how such a purchase will affect your finances and your lifestyle. It makes sense to review all of the advantages and disadvantages of becoming a homeowner before making this big commitment.
The advantages of owning a home:
- Greater privacy.
- Homes typically increase in value, build equity and provide a nest egg for the future.
- Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.
- The interest and property tax portion of your mortgage payment is a tax deduction.
- There’s pride in homeownership, which also closely ties you to your community.
- Using your investment to make another investment
- You can make it your own, paint it, design it, remodel it, etc.
- You don’t have to O.K your pets and pay more for them to be in your home.
The disadvantages of owning a home:
- Homeownership is a long-term financial commitment.
- You’re responsible for all maintenance on your home. This can include inexpensive repairs like fixing a broken toilet to complex and costly repairs like replacing a furnace.
- Owning a home ties you to your community, making it more difficult to suddenly pick up and leave a location.
- Although mortgage payments are usually fixed, they’re generally higher than rent payments.
- Buying a home requires a down payment, closing costs and moving expenses.
- The value of your house may not increase – especially during the first few years.
The advantages and disadvantages of renting a home in Flagstaff
Depending on your financial situation and preferred style of living, there are many advantages to renting compared to owning a home in Flagstaff.
The advantages of renting a home:
- Renting a home can be cheaper than buying a home. Your payments tend to be lower than a comparable house payment. Also, your rent may cover utility costs (additional savings).
- You have more flexibility when you rent. Most leases are for 12 months. So, if your job requires you to move frequently, renting can be a desirable alternative to owning.
- Your landlord, not you, is responsible for performing nearly all maintenance and repair work on the property.
The disadvantages of renting a home:
- There is no tax break for renting. You won’t be able to claim any deduction for mortgage interest and property taxes when you file your tax returns.
- Your housing costs aren’t fixed like they are with a fixed-rate mortgage. Your rent will most likely grow from year to year.
Owning versus renting- a summary of the advantages and disadvantages of each:
| Own Or Rent | Advantages | Disadvantages |
|---|---|---|
| Homeownership | PrivacyUsually a good investment More stable housing costs from year to year Pride in ownership and strong community ties Tax incentives Equity buildup (savings) Using your investment towards another investment You can make it your own, paint it, design it, remodel it, etc. You don’t have to O.K your pets and pay more for them to be in your home. | Long-term commitmentMaintenance and repair costs Lack of flexibility Usually more expensive than renting Potential high up-front costs Foreclosure |
| Renting | Lower housing costsShorter-term commitment No/minimal maintenance and repair costs | No tax incentivesNo fixed housing costs No building of equity |
Here are the factors to consider when comparing buying to renting a home:
- Homeownership is not for everyone.
- Homeownership requires you to have a stable or growing income.
- Financial benefits of homeownership are long term. You should have a budget and savings plan in place before buying a home. Owning a home is a big responsibility.
- Your credit score will impact how much you can borrow and at what terms. If you have substantial credit card debt, you may want to pay your debt down, before applying for mortgage.
As always, if you or someone you know are thinking about buying or selling. Give us a call, email or text!