Renting Vs. Buying A Home In St. George? Which Is Better For You?

The most crucial factor when debating renting vs. buying is determining affordability. If you cannot afford home buying now, home rental is the immediate alternative. Otherwise, you have to cope with living with your relatives until you are ready to rent or buy a home.

So, should you rent or buy a home? In this post, we put into perspective the two sides of the coin. There are particular considerations to bear in mind, helping you decide whether to buy or rent a home.

Therefore, if you are contemplating renting vs. buying, we hope the insights here will give you a perspective helping you make the critical decision.

1. Monthly Budget

As indicated, affordability is a critical factor when making decisions that involve financial expenditure. For homeownership or renting a home, the first step is deciding the amount you can afford to spend on housing monthly. In that regard, calculate how much you are bringing in as monthly income. Next, deduct the total monthly expenses, including basic requirements like food, water, and transportation.  Do not forget to factor the actual monthly savings too. The remainder is the amount you can spend on housing. Whether renting or buying a home, stick to about 28% to 30% of your gross income. Avoid biting more than you chew because it can put you into financial trouble.

2. Consider the Financial Impact and Predictability

Finance experts recommend running a simple price-to-rent ratio analysis when making decisions such as renting vs. buying. Divide the home price by the annual rent of the comparable unit. In case the ratio is below 20 percent, owning a home is the better bet.

With the home rentals option, you know the monthly rent amounts. However, the property management company may increase the rent when you least expect. Owning a home comes with many upfront bills, which may or may not recur the following month. For instance, a Homeowner may d to replace a broken door in one month, and in the next month, its replacement or repair of a leaky roof. Therefore, when a home is owned, it becomes hard to predict the monthly expenditure.

3. Stability and Flexibility

Owning a home comes with a sense of stability. The homeowner knows that he belongs to a particular community and enjoys the pride of homeownership. Therefore, before buying or building a home, you will want to consider the duration you plan to live within a specific neighborhood. Ideally, the longer you plan to live within the given area, the more financial sense it makes buying a home.

For persons who prefer living in certain areas for a shorter duration, renting makes the financial sense. Thus, it is practical renting a home if you have multiple workstations. This is considering that you will not be able to sell the property within a limited duration and buy another home.

4. Tax Benefits

Home buying offers the investor tax benefits that renter may not enjoy. The homeowners may exclude capital gain they realize from the sale of a home, but up to a limit. The homeowners who itemize tax deductions may reduce the taxable income by deducting the interest paid on the home mortgage. However, the taxpayers who still rent a home may not have a comparable ability to deduct interest paid on household goods. Or the rent paid to property owners.

5. Equity

Home buying comes with the benefit of building equity. Ideally, the property owner can capitalize on home equity over time. For instance, if the property value goes up, the property owner can cash in on the higher value upon home selling. Alternatively, homeowners may borrow a reverse mortgage to fund their retirement. However, the renters are helping the property owners to clear a mortgage and build equity.

Therefore, when comparing renting vs. buying, the goal is to identify the benefits of either of the options. Here is a quick summary indicating the advantages and disadvantages of buying vs. renting.

Buying

Advantages

  • Equity building
  • Allows more stability
  • Accruing tax benefits
  • Homeowners can customize the property to their taste

Disadvantages

  • Risk of losing money in case property value depreciates
  • Requires substantial paperwork which should be done upfront
  • Extra expenses beyond the mortgage payments
  • Rising home prices and a low inventory in many markets
  • Responsible for repairs and remodeling
  • Home Renting

Advantages

  • Comes with fewer upfront costs and paperwork
  • Enjoy more flexibility
  • No responsibility for repairs and maintenance
  • The renter does not need to worry about falling home values

Disadvantages

  • Unpredictable expenses since the landlord may raise the rent or sell property, forcing you to move
  • Limited choices in terms of property customization
  • Renters do not build equity
  • No tax benefits

When evaluating whether to rent or buy a home, take into consideration the points we have highlighted. This gives you a better chance to make the right benefit.

Summary
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Renting vs. Buying a Home in St. George? Which is better for you?
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So, should you rent or buy a home? In this post, we put into perspective the two sides of the coin. There are particular considerations to bear in mind, helping you decide whether to buy or rent a home.
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Staples Group Mortgage
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