Renting Vs Owning A Home.
And here we are again at the sweet blog, the sweetest blog online.
The place to be for all fans of the 'Home Concept.'
Today, we would like to discuss one of the most well-known Housing issues - Renting vs. owning a house.
Undoubtedly, this is a broad issue that has (and still does) preoccupy the best economic minds in the world. Our only purpose in this article is just to offer our two cents on the matter.
It is important to note that the preference for one option over another is not only due to economic reasons. There are other considerations, such as peace of mind, social concerns, etc. In this article, we will discuss them all.
Below, we will review the pros and cons of each option and ultimately express our opinion on the matter.
As always, later in the article, there will be a refreshing infographic presentation and a video summarizing its content for you.
'Renting Vs. Owning A Home?'
Ultimately, stability is one of the essential things in life. And no element is more related to the concept of stability than your home (check out our article regarding the deep essence of the "Home" concept).
Let's View a not-far-fetched scenario:
Out of the blue, Your landlord asks you to prepare for eviction because his son is looking for an apartment or something, and he kinda likes the apartment you currently live in.
It is doubly complicated when you have children studying in educational institutions nearby.
A house bought by you belongs to you and you alone. And no one can get you out of there without a good reason (except our almighty lord - the bank).
Stability is definitely a key factor
Stability is also reflected in maintaining your and your family's sense of community.
Suppose you do not frequently move due to rental issues. In that case, you will, presumably, maintain family stability and be part of a stable and happy community.
Therefore, the stability issue is a significant aspect related to our topic - 'Renting vs. Owning A Home-' and it stands as a big advantage in favor of buying.
The fact that you do not have to be in constant pursuit of an apartment search and you are well-planted in your place can grant you tremendous peace of mind.
Rent - Unstable.
Buying - Very Stable.
2. A Sense Of Value.
"The instinct of ownership is fundamental in people's nature."
Said the American philosopher William James.
There is something special about this sense of ownership. Something to do with a deep understanding of Worth.
We do not claim that a person who does not own things lacks a sense of worth. That's not our intention. We are only trying to say that there is positive energy in owning an object. And it's super relevant when it comes to buying a house.
Unfortunately, It is not the case when you don't own the house.
Unlike a rented property, In which any repair you want to make requires the landlord's approval. When the property is yours, You and you alone will decide when and how to fix or add things.
Suppose you feel like changing the wall's color for no particular reason, you can, of course, do so. These are your walls. It is YOUR house!
This sense of worth will undoubtedly contribute to your peace of mind.
A sense of worth as a mental booster A sense of worth as a mental booster
Indeed, even when renting an apartment, you can achieve a certain sense of value, certainly if you rent for the long term and invest in the visibility and quality of your place. However, with that being said, deep down your heart, you know that this is not your Home.
He's someone else's.
Check out this article, and you will be able to enrich your knowledge concerning the feelings related to buying a house and what that sense of ownership means.
Rent - A Limited Sense Of Value.
Buying - A Powerful Sense Of Value.
3. Financial Benefits.
Although it is clear there is a strong disagreement among economists regarding the question of - renting vs. owning a home - Is it financially wiser to rent an apartment all your life rather than buy one with the help of a mortgage (like most people)? Our two cents on the matter are that purchasing an apartment is more financially wise.
'Why'? might you ask.
Well, After an in-depth analysis of this issue, we concluded that the reason favored for the 'Long-term rental' option is the insight regarding the investment alternative with the money used as an "entry payment." - The amount of money you bring up front to the bank when applying for a mortgage. Which usually includes all your life savings. It is typically equivalent to a quarter of the total amount - For the mortgage transaction to be even possible in the first place.
This insight argues that instead of entering into a long-term, full-interest, and "Heavy" deal with the bank and taking out a mortgage, it is much better to invest this money in a channel with almost non-existent risk due to its gigantic size - (Google\Apple\Microsoft - you name it -If they crash then we are probably deep in the apocalypse..) - thus earning more. And easily.
What will cost you less?
The problem with this argument used by many people who support the long-term rental idea is that most people do not have that amount of money in the first place. And most of them "kill themselves" with other risky loans to get it. So, since they don't have that initial entry amount, the financial investment issue was never relevant in the first place.
But suppose one simplifies this question and leaves it as a "pure" idea that puts renting a long-term apartment against buying one, In our humble opinion, Even in that case, it is still quite clear that buying is much more economically worthwhile.
After all, when somebody rents an apartment, he "throws in the trash" every month the rent money that goes to his landlord, as opposed to buying an apartment, when in such a case, every month, his mortgage buys him another small piece of the house by repayment.
And yes, we know that during the first years, they only pay interest.
We are still standing behind the 'Buying argument.'
Rent - Money is thrown in the trash every month.
Buying - Brick after brick, in the end, the house will be yours, and you will leave it to your child without debts.
An ancient Chinese scholar once said:
'Damn you, mortgage lady. Cursed be forever.
If you're a little confused right now it's because no Chinese scholar has ever said such a thing - we just made it up - but the guiding principle is still valid:
The massive burden on anyone who has taken a mortgage is a well-known fact.
The wild interest rates, the increased pressure at any delay in payment, and of course, the great fear that following a surprising life crisis, you will run into financial difficulties that will not allow you to meet the bank terms, and thus, your dream home will maybe be taken away from you.
And although we don't want to be party-wreckers, it's important for you to know that in most cases, in the first years after buying your apartment, you will mainly pay interest.
It sucks, we know.
No doubt that when discussing the issue of renting vs. owning A Home - a mortgage is a crucial consideration.
Read here for more about known difficulties regarding mortgage payments.
The fear of falling into such a situation
Rent - No mortgage. Fun Fun Fun!!
Buy - Can someone shoot me, please?
Another important point many supporters of the long-term rental idea are waving at (and rightly so) is the day-to-day responsibility for home maintenance.
Generally speaking, when you rent an apartment, any repair required that is not due to unreasonable use will be at the landlord's expense. And on the other hand, if you own the apartment, surprise, surprise - all these expenses are entirely on you.
So get your checkbook ready.
Who will fix my sink?
By the way, If you are renting an apartment, read more here about the frequently asked questions concerning when it is your responsibility to repair stuff and when it is your landlord's.
The matter varies from region to region, but the principles are pretty simple.
Rent - Fewer expenses for maintaining an apartment.
Buying - You are the one who has to pay.
In conclusion, we have listed above all the main arguments that usually arise in any "Renting vs. owning a home" dispute.
In the end, and after including all the arguments for both parties, our opinion, As already hinted above, is the following:
If you have the financial capabilities, it is better to buy. And not only due to financial reasons but also due to mental and emotional aspects.
For you and your loved one.
We hope that this article - 'Renting vs. Owning A Home?' - helped you deal with this dilemma properly to a certain extent. And if you have any more questions on the matter, please feel free to reach out.
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