Renting vs. Buying – Which Is Better? Are you a renter, and you’re not sure whether to take the plunge into homeownership? Does the thought of buying a home make you feel anxious because of the uncertainty? Many people, just like you, are undecided and choose to remain a renter. Becoming a homeowner is a big decision and being a renter has its benefits. So, which is better? In this article, you will find out why your concerns are not only valid but perfectly normal. Keep reading to discover the comparisons between renting and buying and about the myths that are debunked.
Initial Step and Process
For most people, taking the initial step to buy a home is the hardest part. Uncertainty is always difficult to adjust to, but once you get over the fear of the unknown and remove the false narratives about the process, you can become empowered. Unfortunately, through the years, people have been led to believe that buying a home is difficult and nothing could be further from the truth.
Here is what occurs with the initial step when renting or buying:
The process to rent an apartment or home is relatively easy. It typically begins with you taking a tour of the dwelling, filling out an application, and then having a credit and background check. You’re asked for proof of income and provide pay stubs or bank statements. You may need to show proof of renters insurance. And if you’re approved, you pay a security deposit and the first months’ rent, and the rental is yours! This painless process is why renting has become so popular.
But is it worth it?
When you buy a home, the process typically begins with taking a tour of several homes, accompanied by a Colorado Springs Realtor, until you find the one that is right for you and your family. The tours are informative, exciting and fun! After a contract is signed, a deposit is made to hold the home. Then, a credit application is completed with a loan officer. You need to provide basic documents, such as pay stubs, bank statements, and a list of assets and liabilities as well as any other pertinent information that the mortgage lender requests. A credit check is completed, and the loan documents are sent to underwriting. You must provide proof of homeowners insurance before the closing. And if you’re approved, the home is yours!
Does any of that sound familiar?
While some things happen throughout the entire home-buying experience that doesn’t occur with renting, the initial steps are very similar – except for the fun and excitement. Despite all the similarities, fear sets in, and potential homebuyers remain as renters. If you have a desire to become a homeowner, the first thing you have to do is remove your concerns about the unknown and replace them with positive thoughts about the potential of a fantastic outcome. Don’t allow fear, otherwise known as “False Evidence Appearing Real,” get in the way of a great decision.
There is no denying that it cost more to buy a home than to rent one. Renting has a huge cost-saving benefit when you consider that it only takes paying a deposit and the first months’ rent to move in. With buying a home, you must pay closing costs, which are generally 5 percent of the purchase price of the home. And that is what stops many potential homebuyers from moving forward.
However, there are so many options that you may not be aware of. While the closing costs cannot be borrowed, there are numerous lending options, allowable cash gifts, and federal programs that provide closing cost credits to assist buyers, especially first-time buyers. Additionally, the closing on the home is set for a later date, sometimes months, which means there is still time to save additional money to pay the closing costs.
Cost of Ownership
An attractive benefit of renting is not having any costs of ownership. As a homeowner, you can’t just call the landlord to fix a plumbing leak or paint the walls. That is an undeniable benefit that attracts so many renters and keeps them trapped in the same place for years, if not decades. And in some cases, for their entire life. However, there is a benefit to having the responsibility of handling the maintenance costs and repairs yourself. For one, you get to do the repairs and upkeep – your way! And you don’t have to wait weeks for a landlord to approve your request or be subject to a maintenance worker, whom you may have never met, entering your home while you’re away. You’re in charge, and that is priceless!
Secondly, the cost of homeownership is balanced out by the incredible tax-saving benefits that you may receive. Each year, there is potential for a good return on your investment. And, just to be clear, it is a myth that homeowners have to shell out huge amounts of money for home repairs over and over again. That’s why having a home inspection is critical. Rarely, if ever, does a homeowner have repairs that are so outrageous that it should prevent them from buying. If that were the case, homeownership might not even exist.
If you’re concerned about potential repairs and maintenance costs, consider a home warranty to cover some of the expenses. That is like having your cake and eating it too. You call the warranty company just the same as you do a landlord and leave it up to them to take care of the issue.
Selling vs. Walking Away
The most convenient thing about renting is that you get to walk away at the end of your lease. And as long as you leave the rental in good condition, you get your deposit back, which is typically equal to one months’ rent. If walking away from your rental at the end of the lease is the only reason why you’re choosing to rent rather than buy a home, you may be making a huge mistake. Unless you’re someone who frequently changes jobs and continually moves from state to state, then it’s not a good enough reason.
If you decide to move and sell the home, you’re in the best position to get a monetary return on years of investing in the home. Chances are good that the selling price will result in a profit from your initial purchase price. With the traditional rise in home values, after you pay closing costs on your first home, you may never need to come up with that money ever again. The proceeds from the sale of the home usually contribute to the next home that you purchase. Does a rental provide you with that type of return?
One great benefit of buying a home is the relationships that are formed when using a Colorado Springs Realtor. It cannot be stressed enough just how important it is to have someone who not only works hard for you but also is attentive to your needs as a potential homebuyer. The relationship that is formed between a buyer and a Realtor can last for years and sometimes a lifetime. A Realtor gets to know your family and your values, and the things that are important to you throughout the home-buying process. That often creates a good rapport.
As a renter, it’s not only rare to form that type of relationship with a leasing agent, but you’re also not privileged to having someone that you can depend on for information after the transaction is completed. The person that handles your rental is often not even with the company months or years after signing your lease. And if they are, once the lease is signed, their input and help are very limited and sometimes dissatisfactory. Leasing agents have to maintain certain company productivity standards and, through no fault of their own, they have limited time and resources to provide personal attention in the way a Colorado Springs Realtor can.
We Can Help
The Tommy Daly Home Team is committed to ensuring that every potential buyer has the resources they need to make an informed buying decision. We have empowered numerous home buyers by providing them with the most up-to-date information in the real estate market, including whether the time is right to buy a home for the first time. Our consistent dedication to the industry has allowed us to continually learn and pass this information onto our clients. We enjoy what we do, and we are outstanding problem-solvers. Everyone on our team has one core mission – Work hard to satisfy our clients! With empathy, active listening, and effective communication, we’ve been able to successfully help many renters achieve homeownership and live the American dream.
If you would like to learn more about the home-buying process and stop renting, please do not hesitate to contact us. It would be our pleasure to help you!