Is it better to own or rent a townhome? There are reasons why you can decide to rent or buy. We will look at both options and the reasons why each is favorable or not. In the end, you will decide which plan best suits you—is it townhouses for rent or townhouses for sale?
When renting a townhouse is a good idea
You cannot afford to buy a townhouse
Buying a house comes with a lot of costs which can be too high for someone with a low budget. These costs include upfront costs such as earnest money, inspection money, and appraisal fee. Apart from that, there are also costs of owning a house including mortgage fees, utility costs, property taxes, and repair and maintenance of the property.
Your finances are unstable
Renting a house does not require you to have a stable income as you can move out whenever you are unable to pay the rent. When it comes to buying a house, you have got to have not only a stable income but also one that has the potential of rising. Default on mortgage payments can be very costly and having security of payment for example in terms of job security for a long period of time is essential.
You want to save the extra money for more profitable investments
It is wiser to rent a house as it is cheaper and save the rest of the money for investments. In the long run, you can create more wealth with the extra money you have saved as compared to the individual who has spent his money on paying mortgage and associated costs of home ownership.
You do not intend to stay in the house for long
If you are not planning on staying around for more than a few years, it is better to rent the house. Selling a house may not be as easy when you want to move so when the time comes, you want to be able to pack your bags and go without having your money tied up somewhere for maybe even years.You move around a lot
If your nature of work requires you to move a lot, it is better to rent a house than buy. Consider how much time you will be spending in the house versus in other places such as hotel rooms and restaurants or traveling abroad. When your life is more stable, then you can decide on when you want to settle and maybe, considering all other factors, decide on whether you will go for a townhome for sale. Staying in a rented house will make you more flexible.
You have other financial obligations
In case you are still paying other loans, school fess, or your money is tied up in other liabilities, it is wise not to add on to the burden of buying a house. In the long run, it will not be sustainable.
One of the major disadvantages of buying a house is the hiking of rent. Rent is bound to go up mostly yearly because of increase in the value of land. This can however, be covered by the investments you are making with your extra saved income.
No deductions for mortgage interest and property taxes
While home buyers enjoy tax deductions due to the mortgage payments they make every month and property taxes, you will not enjoy such benefits when you are renting a house.
When buying a house is a good idea
You income is high, stable, and rising
If you have a good source of stable income which is also rising, then buying a house may be for you. You should be able to cover all upfront costs and the recurring costs that come with home ownership such as mortgage fees, repair and maintenance costs, utility costs which depend on the size of the house, as well as property taxes.
Huge tax benefits on federal income tax
Another benefit of owning a house is the tax deductions that you get for paying your mortgage. These deductions could be considerably high considering that mortgage fees are usually very high too. Mortgage payments are stable
Unlike rent which is bound to go up. Mortgage fees are stable. Despite that, mortgage fees are still generally very high compared to the rent you will need to pay monthly.
You will eventually own a home and benefit if the value of your land continually goes up which means you own a valuable asset.
There are too many high costs associated with home ownership
Costs of home ownership, both upfront and otherwise are many, not to mention very high.
The amount you borrow depends on your credit level
You have got to have a very high credit rating to borrow a huge amount of money. Otherwise, you will only qualify for a small loan which may not benefit you as much.
Once you have already bought a house, it will be very difficult to move if the conditions in your neighborhood change for worse. For example, if security worsens you will end up stuck in the same place. Also, if conditions of living worsen in the place where you have bought a house, the value of your home may go down, a loss you have to incur.
Long-term financial obligations
With fixed mortgage payments which sometimes take years to pay, you will end up with long-term financial obligations which can be tiring. It is also risky because in case an unfortunate event happens such as a job loss and you are unable to continue paying your mortgage, interest rates and penalties will start to accumulate and may go beyond manageable levels.
Renting a house comes with a good number of benefits and can be way better than buying one. If you are not ready for all the risks and financial obligations of owning a house, then find townhouses for rent.