For many individuals and families, owning a home is the ultimate goal. It marks a sense of pride, wealth, and legacy that many people value. The question then becomes, if people can afford to pay rent, then why wouldn’t they just purchase a home and pay a mortgage? The answer is not as simple, and there are many factors that could impact the decision of someone choosing to rent vs. owning a home. I will highlight a few factors below.
While the rent payment may equal the same as the mortgage payment (inclusive of home insurance and property taxes), there are additional costs associated with home ownership. Take for example, when a person rents, if there are any maintenance issues, or appliances give out, then by law, it is the landlord/landlady’s responsibility to remedy any concerns. On the other hand, when a person owns their own home, any issues that arises will be their financial responsibility. There is no one to call on, and request for them to repair or replace anything. While it is highly recommended to have an emergency fund if you are a renter, it is even more so important as an homeowner to have an emergency fund. It might even be best to have a home maintenance emergency fund/sinking fund separate from your regular emergency fund.
Many may choose the path of home ownership, despite the responsibility of maintaining the home, because once the monthly payments are fixed (fixed-year mortgage), then there is no unpredictability of how high the payments will go. See, the fact is that I have yet to see rent payments decrease each year. Even in areas that may be considered undesirable, landlords tend to increase rent when they can. Each year/when the lease is coming to an end, and is time to renew, the new lease payments tend to increase. In some markets where rent prices are volatile, the payments could skyrocket high above what a fixed mortgage payment would be. Hence, the ability to minimize the risk of fluctuating payments is an advantage for those who may choose home ownership.
On the other hand, some may choose to rent instead of owning a home because they value the freedom and flexibility to move from one place to the other with no obligations. When a person owns a home, it is not always easy to just get up and leave. That individual has to decide whether to not to sell the home (which may take a long/short time to sell), or if they want to become a landlord/landlady and rent out their home.
One additional point I wanted to share is that I consider very important, is to not let your dire need to become a home owner, cause you to make an hasty decision to take on a large purchase that you are not able to afford currently, that cause you to be stressed, just wondering where the next payment will come from. Take your time to plan and save for this big purchase, and make sure you are ready. You will become a home owner if it is your goal, and you take the necessary steps to achieve that goal.