Taking the home purchasing plunge can be scary, exciting and one of the biggest decisions a person can make. With an uncertain economy and a worst-in-nation home shortage, things can seem even more overwhelming and scary. While owning offers more benefits in general, there are pros and cons to each. The best decision usually depends on your individual situation. Home buying rarely offers a one-size-fits-all answer.
Owning a home
In the grand scheme of things, home ownership can seem more beneficial. "Buying a home can save the owner thousands of dollars over the next five years," said Ben Kubic of Virgent Realty. There are tax breaks for homeowners and first-time home buyer programs that save money as well. According to Kubic, the price of renting is just not worth it in today's market.
"Rent Jungle states that the average rent for a two-bedroom home within 10 miles of Atlanta is $1,777, which is an increase of 3.4% over the last 6 months," he said. "That is a huge jump!"
When you compare the facts of buying and renting in Atlanta it seems that buying is the right idea.
"The average sales price of a two-bedroom condo in the same radius of the two-bedroom rental is $251,006 (FMLS). After the home ownership tax savings and the appreciation of the asset, a home owner will end up saving $70,000 in cash over 5 years. This includes consideration for all the closing costs associated with buying a home."
Some basic advantages to home owning are:
- Homeowners are building equity.
- You can make it your own to fit you and your family's needs.
- There are tax advantages.
Some disadvantages include:
- There are variable costs that the homeowner is responsible for.
- Equity can be unstable.
- Large initial investment.
Long-term renting
Financially speaking, owning a home is the more economical idea for Atlantans. However, you will have to consider the required down payment.
"On an FHA loan, with a 3.5% down payment, a buyer will need close to $9,000 cash up front to make the purchase," Kubic said. If you don't have the cash, renting may be a better option. Renting is also smart for busy professionals who may not have time to perform home maintenance. If your job is unstable or you are not sure where to live, renting is probably the best bet. Employment and economic uncertainty makes many other potential buyers scared to take the leap to ownership. This may be why even though home buying is more financially sound, renting statistics are skyrocketing and ownership numbers are dropping.
Some basic advantages to renting are:
- Good in uncertain situations.
- Less work and less money is required for maintenance.
- Smaller amount of cash is needed up front.
Some disadvantages include:
- Renters do not gain equity.
- The home doesn't belong to the renters, so you usually can't make it your own.
- There are no tax advantages to renting.
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