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Rent vs. Mortgage

By Edited Jul 16, 2016 0 0

Rent versus mortgage

It’s been an inner battle for years. Rent vs. mortgage. People worry about whether they’re throwing their money away on renting. But others worry about all the responsibility of owning a home. So today we’re going to weigh the pros and cons of each and hopefully help you decide between rent vs mortgage in your own situation.

Introduction

Renting a house

Renting a house or apartment is still a big responsibility. It’s usually going to come with a 1-2 year lease. The longer lease means a little less rent each month. But beware, because a longer lease means more months for you to break a lease. Young people are discouraged from signing any leases because of the large number of leases being broken by people under the age of 30. Rent vs mortgage for someone that young probably isn’t much of a concern anyway. But as you hit that 30 year threshold, you start to wonder about finances. So, here’s a quick rundown of renting:

Pros

Pros of renting
  • Maintenance – If you break something, you know someone is there to fix it for you. This is great for young and old alike. If you have children, a free maintenance service could save you a fortune in itself. Also, this applies to the state of the apartment before you even move in. Everything will be in perfect working order for you.
  • Amenities – Renting an apartment will usually give you access to things you wouldn’t normally be able to afford on your own. Pools and gyms are becoming a staple in apartment life. Not many people young enough to enjoy the pool, are old enough to afford their own. So having one on site is great.
  • Utilities – Many apartment complexes offer to pay your water bill or part of your cable. But on top of that, your other bills will be lower as well. People living in apartments can expect to pay around $100 less per month for electricity.
  • Security – Most apartments are gated these days. You have a key or a clicker to open the gate. Also, only people you buzz in can get access. This is a great feature for people with children as well. It’s great peace of mind to know that there’s a large iron gate and possibly even a security guard between your children and the boogie man.

Cons

Noisy neighbours
  • Neighbors – While most people would consider this a pro, I’m talking about the noise factor. Also, if you’re the noisy one, then you will have neighbors knocking on your door at all hours of the night telling you to turn the radio down. You can hear people walking up and down the stairwells and hallways. Anyone having a conversation out on the landing should not expect privacy.
  • Office – Although maintenance will be there when you need them, you also have office staff who will be coming to your door often. They’re always leaving notes on the door or reminding you to park in your assigned parking space. If you’re in any way a ‘problem’ tenant, you start to fear the office people like you feared the office at school.
  • Fire Alarms – As a teenager, it was probably fun to pull the fire alarm. Now that you’re older, those teenagers live in your building. They also don’t care that your baby is finally sleeping or that you have to get up for work in 4 hours.
  • No Ownership – You’re paying a lot of money every month for something that will never be yours. That’s why people against renting believe that you’re just flushing your money down the drain.

Mortgage

Home mortgage(78303)

If you’re at that point in your life where you want to buy  your own house, then this information is going to be vital to you. Rent vs mortgage is probably weighing heavily on your mind right now. So let’s spell it out for you and see if we can’t help you make up your mind.

Pros

Pros and cons of mortgaging
  • Ownership – Contrary to apartment life, owning your own home is a major accomplishment. You know that the money you’re paying every month is for a purpose. Sometimes you can even buy a house for less than you were paying in rent, if your credit is worthy.
  • Decoration – When you were renting, you couldn’t paint the walls or put whatever you wanted in your yard. Now that the house belongs to you, the gloves are off and it’s all fair game. Some Home Owners Associations have regulations regarding visible décor, but for the most part you have free reign.
  • Equity – After a few years of paying your mortgage on time, you’ll get a letter from the bank telling you that there’s equity in your home. At this point you can either refinance and bring your payments down lower, or you can borrow against that equity. If your home wasn’t in perfect condition when you bought it, this is the time to make it better.

Cons

  • Equity – People in the current housing bust are well aware of the double edged sword that is equity. You had plenty of it 4 years ago, and now you possibly owe way more than your home is worth. It’s a gamble and sometimes you lose.
  • Maintenance – Unlike renting that apartment, there’s nobody here to fix that water heater or AC after it goes out. You either have to fix it yourself or pay a lot of money for someone else to do it. These repairs often cause people to not be able to afford their homes anymore.

Summary

For anyone worried about rent vs mortgage, you know how easy it is to keep yourself up at night with all the worrying but it doesn’t have to be that way.  Just take into consideration some basic points in your life like age, income, and marital status. If you’re 22 with no children, you don’t need to rush into buying that house. Chances are, you’re going to move away for work or find someone who lives way across town. It’s a lot easier to leave an apartment than it is to sell your house and move.

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