Buying or Renting a Home - Essay Example

Your full September 3, Is Renting a Better Option than Buying? People either rent or buy the lodging but what makes them decide which way to go is their own perception of pros and cons of the choice they make. Some think that renting is a better option and live their whole lives in a rented apartment, alone or shared; while, others are of the view that buying a house is a better investment of money. This paper is going to second the fact that people who rent make a wiser decision. The advantages of renting will be discussed to give the reader an idea why renting is better. Also, the disadvantages of buying will be taken into account simultaneously which will support the thesis statement that: renting is better than buying. People want to be flexible or more so, they need to be flexible in today’s busy world. When they live in a rented lodging, they can always pack up their luggage and move to the other place on short notice without much loss of money except for some termination charges that have to be paid when people leave too early. On the other hand, a bought house becomes a problem when people have to sell it off and move immediately. Selling takes a lot of time and it is next to impossible for them to cut their roots and move. Also the money that has been spent on the maintenance of the house gets all wasted. Homeowners spend money on fixing every little thing that goes wrong, such as, fixing the cable wire, having the whitewash done every six months, taking care of the sewage system, and so on. Money is at stake here. When you rent, you do not have to be worried about replacing the roof, getting the paint job done or buying a new furnace. In a rented apartment, it is the owner’s responsibility to call the plumber, have him fix your shower pipe and pay his fee! The person living at rent is all free to look for his desired job in any geographical area that is in his reach, such as, another city. This is again a flexibility issue. He just has to end up his lease, pick up his goods, call a truck, load it and there he goes. When a person lives at a bought house, he has very limited choice of looking for his desired job. He will have to stick to his city because for him, it is difficult to sell off his furnished lodging and buy another in another city. Renting does not bring with it the hazard of paying ownership taxes. That is the biggest relief while one is on rent. People who own their houses spend a lot of money on paying taxes to the local government, such as home ownership taxes known as property tax, home association dues, any mortgage payments, broker’s fee, registration fee, and the like. They also have to pay for the insurance policy to get a reimbursement in case the house gets destroyed like burning down. These taxes and fee do not add to the asset or ownership. Renting saves people from wasting their precious money on things which add nothing to the equity. Insurance is another issue that gives a plus point to renting. A renter’s insurance is very much low-cost than a homeowner’s insurance. People, who opt for renting, save enough money to invest it in some business. They get a sort of house appreciation that they were missing out from not having home ownership. After all, it is better to be engaged in a business, earning, saving while living at a rented apartment instead of doing nothing while living in an owned house. Saving at rent becomes easier because rents are too low as compared to prices and transactional costs of residential real estates. Also, one does not need copious amount of money to do the down payment for buying. A homeowner may find after a couple of years that he could have invested that big chunk of money in the stock market which could have provided him significant capital gains now. Renting makes this possible though. Moreover, since rents are lower than house prices, one does not need to go for loans and debts to start off with renting. Purchasing a house usually requires some percentage of debt. Studies have shown that income levels have never come at par with home price inflation. Last decade has seen 50% increase in home prices whereas the median income has increased by only 10%. Thus, renting makes it easier to strike a perfect balance between one’s income and expenditure which includes rent. People who buy perceive that they will be getting home appreciation after some years when they will want to sell it off. But that is a long-term thought because to watch out the property’s value appreciation, one has to stay committed to it for a long time no matter how much the circumstances demand him to move. And if unfortunately, one has to move before the property cost has seen its appreciation, then he is at the loose edge. Short-term perception and history forces us to believe that once prices see inflation, they finally drop back after a short time period. This is referred to as market freefall. People who rent do not have to go through this headache of watching their equity disappear, may it be for a small time period. Putting it all together, staying on rent or owning a house is a life changing decision that must be thought out very seriously considering all pros and cons on both sides of the picture. Common sense or, to be more accurate, financial sense says that home ownership brings with it many responsibilities, inflexibilities and expenditure of money. Thus, one should not take lightly the decision of entering into owning a house. Renting does not demand much from your pocket except for a few bucks that you have to spend every month, and hence can be considered as a wiser option to go for in today’s bubble-stricken market. Read More