Renting is often the only option for younger individuals; buying a home is pretty costly, and you will, unfortunately, need to jump through a few metaphorical hoops to secure mortgage loan approval.
But even so, owning a home offers several unwavering benefits that renting can’t. For starters, when you own a home, you’ll have absolute living stability, a stable budget, and the opportunity to significantly increase the value of your asset.
On the other hand, renting comes with the following major downfalls.
One of the most common reasons to buy is to achieve living stability. As a tenant, your landlord can decide to sell their home or not renew your lease for any reason. With this, tenants find themselves looking for a new rental every year to two years on average.
With living instability comes a lot of anxiety; not knowing how long your home will be yours is undoubtedly unsettling.
If this fact is weighing heavy on your mind, it’s worthwhile to start saving for a down payment and browsing real estate in Colorado and other areas.
The money you pay every month for rent goes to the owner of the property. It does not secure any sort of ownership for the tenant, it’s non-refundable, and you won’t be building up any equity along the way.
On the other hand, when you own a property, you’ll be building up equity each time you repay your mortgage. Later, you can release equity on your property to pay your mortgage loan off sooner or even invest in impactful home improvements that enhance property value. For this reason, buying a home is an investment, while renting is not.
It’s Easy To Lose Your Security Deposit
You’ll have to pay a rental security deposit to secure the rental lease. This amount of money is typically equal to one month’s rent, and it should be refunded when you vacate the premises. However, it’s pretty easy to lose your security deposit.
Any changes or minor damages to the property will see you lose your security deposit, from knocking a nail in the wall to hanging a picture or repainting. Unfortunately, tenants are not allowed to modify a property in any way.
No Financial Incentives
There are no relevant financial incentives for tenants. As mentioned, your rent goes straight into the owner’s pocket, and you’re not entitled to anything in return except the right to live on the property for another month.
But if you own a property, you’ll be entitled to a variety of tax incentives.
Rentals Are Expensive
When comparing the costs of renting a property to the costs of repaying a mortgage, you’ll find that it’s far more affordable to own than it is to rent. Unfortunately, rent is also skyrocketing with ongoing economic uncertainty, and your rent will continue to increase over time.
On the other hand, when you own a property, you’ll have a more stable budget because your mortgage loan repayments won’t fluctuate.
That said, if you’ve decided it’s time to buy a home, you’ll need to increase your chances of loan approval. Boosting your credit score, having the right documentation, and saving for a down payment are all effective ways to enhance your chances of mortgage loan approval.