Talk to five different people about buying vs renting and you're bound to get five different opinions. Buying is a big commitment, but it's also an investment — which is something to consider. Meanwhile, renting is more low-maintenance, but your money essentially disappears each month, right? Maybe. Maybe not. Let's go deeper into buying vs renting a home and which is better.
4 Myths About Buying Vs Renting a Home
1. Renting a Home is Cheaper
One thing that deters many would-be homeowners is the cost compared to renting. Purchasing a home means a hefty down payment, closing costs, and additional expenses that renting doesn't carry. So, it stands to reason that renting a home is cheaper.
With rent costs steadily increasing in many states, it's actually not common for owning to be cheaper. In fact, 2018 estimates said that buying was cheaper than renting in 40 states.
Furthermore, one must consider that eventually, a purchased home will be paid off, at which point the monthly expense will be much more appealing than a rental that's never totally yours.
Because a home is an investment, as you pay off your mortgage each month, you're kind of sending money to yourself. Plus, you're building equity. Bonus!
We also can't forget the tax benefits and incentives for owning a home, the biggest one being mortgage loan interest deduction (and, as a byproduct, your loan discount points). You might also be able to deduct your mortgage insurance payment and real estate taxes.
Of course, the rules and laws here evolve over time, so it's best to talk to a professional to see exactly how things work in your area.
2. At Least With Renting, the Landlord Handles Any and All Issues
As a renter, you've got a landlord who's mainly responsible for making the home livable. If something major goes wrong, like a pipe bursts or the heat/air conditioning isn't working, then yes, your landlord needs to step up and take action.
However, don't expect much help from them if the carpeting is looking a little sad, the place could use a fresh coat of paint, or the ceiling fans look dated. If the landlord addresses these things, and that's a big if, the cost will very likely come out of your security deposit. (You didn't expect to get that back in full, right?)
But more than likely, for repairs and upgrades that are more cosmetic, you're likely on your own, and that's if you're allowed to make those changes in the first place. In many cases, your hands are tied, plain and simple. The landlord or property management company might not allow you to do things like paint the cabinets, replace the countertops, or update flooring.
The obvious pro with owning a home is that you can do whatever you want to it. Yes, the expense is probably with you, but you also maintain control (and that's priceless).
3. Plan on 20% for a Down Payment
For many years, that's been the rule of thumb. However, times have changed.
These days, lenders are making available loan programs and options that offer more flexibility to all kinds of buyers — even first-time buyers. It's making it possible to purchase a home even if you're younger (we're looking at you, millennials), you're paying off student loan debt, or your credit score is underwhelming.
(Side note: The average credit score in the United States is fair to good — 680 based on the VantageScore model and 702 based on FICO.)
This might mean that you're able to get a home with a down payment of just 5% to 10%; and sometimes, it's even lower than that.
Of course, don't take on a loan you can't comfortably manage. Furthermore, don't plan to have just enough money for only the down payment and monthly mortgage costs. Bear in mind that you will run into additional expenses, and yes, they can add up.
But the point is this. Don't assume that because you're younger, a first-time owner, or have a less-than-perfect credit score, you can't become a homeowner. This is especially great news for millennials, who want to buy homes — and they are, in increasing numbers. But they often can't find a way around burdensome student loan debt and a less-than-promising paycheck.
4. A Real Estate Agent is Yet Another Expense of Buying a Home
This myth about buying vs renting is one that's really overdue for a correction.
For starters, real estate agents are not an extra expense to you. They get paid on commission, meaning that they're basically offering their expertise to you throughout the process for free.
And even with the commission, it's more than worth it. This is because a qualified real estate agent can seriously keep you from landing in hot water. They'll make sure you're protected when it comes to paperwork, contracts, and negotiations. They'll also ensure that you're keeping as much money in your pocket as possible. The cost of not working with an agent, should things go south (which they easily can) is far, far greater than opting to work with one who will get a commission once the deal is through.
Plus, agents have access to properties that you can't find online with a simple Google search.
In an age when you can find so much of what you need online, hopeful home buyers think they can handle matters themselves. However, it's undoubtedly in your best interest to work with a skilled real estate agent.
So, What's the Final Verdict?
Buying vs renting: Which one is better? We can't answer that for you. Everyone is in a unique situation. But we can offer you the facts and dispel common misconceptions. Consider the options and weigh your pros and cons, and bear in mind that buying a home has never been more possible than it is today.
If you have questions or you're ready to take the next step, contact The Brendan King Group today. We're a team of experienced real estate agents with a proven track record, passionate about Las Vegas and its residents. We look forward to hearing from you!