Home Ownership vs. Renting: Which One Is More Cost Effective?

Posted by - November 23, 2017 | Category: Contributing Author

Should you own a home or rent one? It’s an age-old debate that never seems to have a clear-cut answer. Whether you’re considering moving into your first home or simply moving to a new area, it’s an option that is worth your consideration.

Ask around and you’ll find that the majority of people are only on one side of the fence or the other, but what are the true pros and cons? Is one option the clear-cut choice, or do they both have their merits? Here’s what you need to consider before making a final decision.

Costs: Renting

When comparing the cost of owning and renting, most compare the price of rent to a mortgage. This alone isn’t enough information, however.

When you’re renting an apartment, the rent is usually the only cost you have to consider. There might be laundromat fees, utilities not covered in the monthly rent, parking and amenity fees that increase your overall cost. You’ll also have to take renters insurance into consideration, as well as any deposits or application fees.

All in all, these can tack on a couple hundred dollars every month depending on the apartment. There are plenty of all-inclusive apartments, however, which bring the cost back down to just the rent.

You could also opt for apartments like the ones at www.carmelapartments.com/carmel-midtown-square-camp-springs-md. They provide features that would cost tens of thousands to add to a home while rivaling the mortgage costs of higher end houses.

As for maintenance, that’s your landlord’s responsibility. Now, they might not be as reliable as they should be, but you still won’t have to pay for repairs or upkeep on the building. Relocating is also easier, since all you have to do is not renew the lease. While you’ll save a pretty penny on realtor fees, you’ll miss out on money that comes with selling a house.

Costs: Owning

On the homeowner side, you’ll find that your monthly cost is far higher than just the mortgage. There are property taxes to consider, as well as homeowners insurance for the entire property and not to mention interest on the mortgage loan.

While you’ll be able to deduct far more come tax season, that money will most likely be spent on the cost of maintenance for your home. Simple upkeep is estimated to cost 1% of the home’s purchase price.

Maintenance, however, aids in the appreciation of a home’s value. This will allow you to make a profit should you need to turn around and sell the house through a realtor or a land contract buyer (use this site for reference: http://www.amerinotexchange.com/land-contract-buyer/). Keep in mind, though, that the cost of insurance increases in proportion to the value, once again adding to the monthly bill.

There’s also the matter of a down payment. While the minimum is only 5% of the home’s purchase price, that can still add up to major chunk of cash coming out of your savings. Deciding to sell also comes with closing costs, which range from 2 to 5 percent of the purchase price.

Which One Is More Cost Effective?

The allure of owning your own home is a strong one, but there’s no denying that renting saves hundred to thousands of dollars every month on costs like maintenance, taxes, and insurance. You’ll pay less to acquire your new dwelling while saving enough to pad your savings account throughout the year with an apartment like the ones at http://www.carmelapartments.com/the-waypointe as opposed to a house with an equivalent mortgage.

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