Is it smarter to buy or rent a home?

Question

In an rented home, you wouldn't be responsible if the A/C gave out or to roof needed fixing, right. But when you buy a house, your not throwing a payment away never to see it again. When you sell the house, you'll get that money back, or atleast most of it.

Answer 1

Always buy, you will never loose in the long run.

Answer 2

You are throwing your money away every month when you rent. Buy the house, always BUY!. Then it is yours. It has been statistically proven that if you stay in a house for about 5 years you will be making money on the resale. People do this all the time. Buy a property, do a little clean up or fix up and rent it out. Take the money you are making from the renters and put it towards another property. Next thing you know, you own 5 or 6 houses, and you are collecting rent from 5 or 6 tenants. That could be your entire income right there. You could quit your job and just manage your properties. So ask yourself this, would you rather pay rent or collect it?

Answer 3

I think whether or not buying or renting is the better way to go depends on the individuals needs, what they want, etc. For example, I rent (an apartment)...to some that may be throwing away money - but maintenance is taken care of by the landlord, as well as snow removal, landscaping, etc. I'm not paying property taxes. I'm not paying for upkeep (i.e. roofing, carpet, painting, windows, etc.) besides what's already worked into my rental agreement (rent is going up $18 from the previous year). Currently, I'm a single female in school and working full time with really no clue what I want to do or where I want to be in the long run. If I actually do buy a house it will be someplace far far away from the area I live now. I just don't want the hassle, headache, etc. of homeownership. Now granted, as things stand in my life right now...I'm never even home for more than a few hours each day...my boyfriend lives (owns his own home) 15 minutes away from me and more often than not, I'm there.

Answer 4

From my personal experience, buying can be beneficial, BUT renting allows for ease of mobility. So think about why you want to buy, and if you plan to stay for a while. If you need to move within 2 years, you may have to pay Capital Gains taxes. Also, buying may not be good if you don't have a decent downpayment. This is the trap I fell into. We bought a house 3 years ago, and financed 100% of it (in an 80/20 mortgage), so now we have almost no equity. We are trying to sell our house, and the market is really bad now here in TX. We have to move out of town in 2 weeks for work/school, so I actually wish now that I hadn't bought this house. So if you need to move around a lot, because the housing market fluctuates so much, I would caution against buying. On the flip side, we sold a house in 36 hours for profit in Northern VA back in 2002, so my advice is to research the real estate market in your area, make sure you are prepared to put a decent down payment on the house, or just rent if you may need to move quickly (ending a lease is easier than selling a house in some cases) Good luck!

Answer 5

I rent a house and I think it is the stupidest thing I could do. Not only do I throw away the money as you stated, but I pay far more to rent than I would to buy. I could have already payed for a house as much as I pay and as long as I have lived here, and I would have something to show for it, not to mention collateral if I ever needed a loan. Most people start renting when they do not have the credit to buy a house or are too young to know where they will be in a few years ( which was my case). Right now I am in the market looking for a house. Most house also gain in value and do not decrease unless they are poorly taken care of.

Answer 6

This, my friend, is the dilemma of "investment". Renting is good when you're younger, don't have too much money saved up, and don't have a line of credit that will allow you a loan to buy a house. Of course, in theory, its best to own a house, as you then have its value under your belt. Owning is smarter, because you have something to show for your money, but as you mentioned, much more responsibility.

My parents just had to replace a cracked cistern under the house, which cost about $12,000. On the other hand, my father is only a few years from paying the place off, and can also borrow against the houses's equity to pay for unexpected expenses, at very low rates. Owning is the way to go, but only when you have the time and the money to make it work.

Answer 7

Buying is always better - you can take off the mortgage interest - at tax time. You are buying and not paying your landlords mortgage.

Other things to consider:
When you Decide to buy, decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now - (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 - This is just a estimate - ok -

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thru a realitor, and the seller has to pay the realitor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far??

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.


Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

Go to these websites

http://www.nehemiahcorp.org/

http://www.fanniemaefoundation.org/...

http://www.fha-home-loans.com/

http://www.freddiemac.com/

home values Just add 10-15 percent to the values on this site.:
http://realestate.yahoo.com/Homevalues

Just a reminder, you will get a 1099 INT form, for interest you paid each year at tax time, you can take that off if you go 1040 long form. Sign up for your Mortgage exception and Homestead exception and any other exceptions at your local court house 1 month after you close on your loan. This will LOWER your PROPERTY TAXES. Your Broker should mention it to you, or your closer at the closing.

If you go with a FHA loan, FHA has MI included. (With a 580 + you will be going sub-prime the rates are higher by about a 1 percent, but you have no MI. (MI is mortgage insurance in case you default on the loan, it is a way for lenders to have added insurance. It is not the same as Home Owners insurance, ok)

Conforming A+ borrower's loans have MI included, but the rates are better starting in the mid to high 6's (with rates going up.) The more money you borrow - the higher the rate normally. There are a lot of factors involved.

With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true....



Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency's and other useful information. This is not an advertisement - just helpful information for you...

Answer 8

I know everyone says it's better to buy. But if you are planning on moving in the near future (like if you're still in college etc..) it's better to rent until you get settled where you plan to stay awhile, because once you buy a house you can't just give notice and move. You have to sell it. It can be a hassle (if you have lots and lots of money it wouldn't be an issue I guess)

Answer 9

I think both have the advantages and disadvantages

If u buy a home u will have ur own yard u won't have to listen to somebody U can basically do what u want. But the disadvantage is u would have to pay a lot of taxes


But if u rent a home u have to listen to a landlord but all u would pay is the rent.

Answer 10

If you buy a house, you usually get a 10 year warranty on the structure and a 1 year warranty on everything else (check with the builder!). Renting a home or apartment gives you flexibility to move every six months to a year. A home allows you to build equity and there are some tax breaks you can take advantage of.
Homeowners also get discounts on insurance, etc.

Answer 11

Buying a home is a great investment. As long as you keep up the maintenance on it, you can get your money back easily and still have a profit when you sell. Location is a major factor in the value of a home. You don't want to put $1000's into a home in a very run down area of town. You won't get a good return on your investment. Check out the homes for sale in your area. See what they are going for and then find one that is suitable to your budget. Good luck!