Weighing the Options: Renting vs. Owning your Home
Posted by Craig
June 5th, 2008
Real Estate
Home ownership has always been the American dream; however, recent drops in the real estate market have led many to wonder whether they are better off renting or whether now might be the right time to scoop up a deal while housing prices are still low. Weighing the advantages and disadvantages of both options is certainly wise, especially considering the spikes in foreclosure rates around the country. If you do choose to purchase a home, remember that getting behind on your mortgage note can result in foreclosure. Taking out payday loans or a cash advance can help you to keep your payments current.
Renting is an ideal situation for individuals who do not want the responsibility for handing home improvement needs and the costs related to maintaining a home. These needs and costs are typically handled by the landlord. Renting does not provide the ability to build up equity in the property; however and typically does not offer as much privacy as owning a home.
Home ownership involves a commitment both in terms of the cost related to home maintenance but also to handling those problems. On the other hand, when you own a home you have an opportunity to build equity, you do not have to answer to the rules of anyone else and you have far more privacy. In addition, you can usually take advantage of tax savings that are not offered by renting.
In some cases the decision whether renting or buying is the best option for you may depend on your individual situation. While mortgage loans are certainly still available, it is important to know that your credit is more important now than ever in obtaining a mortgage loan. The best interest rates still go to those mortgage loan applicants with higher credit scores. Keeping your credit report clean is essential if you are considering buying a home.
In addition, make an effort to pay your bills on time. If you find yourself running short of cash, consider options that will allow you to still pay your bills on time to avoid having a delinquency on your credit report. Payday loans and a cash advance can help in such circumstances. By taking out payday loans or a cash advance you can pay your bills on time and avoid having a late payment posted on your credit report that could cause problems when the time comes to apply for a mortgage loan.
Payday loans have been a huge controversy here in South Carolina, as well around the country I do imagine. Used correctly, which they usually aren’t, they can provide someone with some quick cash that they may need to save their credit.
Posted on June 6th, 2008 at 3:57 pm
Great post Craig and it’s one of those age old questions whether renting or buying is better.
The question has so many variables that the answer always depends on individual circumstances,preferences and goals.
In my country, Australia, home affordability is at a 30 year low and we are finding ( just like our US counterparts ) that the staggering fuel increases act as a psuedo interest rate rise in both dampening the market and killing affordability becasue of the cost of borrowing and/or the cost of living.
But of course those very same forces cause house prices to lower and that has the opposite effect in allowing some people to purchase who otherwise may never have been able to.
Bottom line is that you need to be in a position to take advantage of which ever way a market is going.
There are plenty of pros and cons in the buy versus rent argument but just educate yourself and you’ll make the best decision for you and your unique circumstances.
Thanks for creating an excellent site at cmeconferences Craig and keep up the good solid analysis so that people in other countries can get a perspective on the state of the US market since it always eventually filters through to affect our own market.
Andrew Blachut
PropertyNow
Australia
Posted on June 13th, 2008 at 11:42 am
I do agree that Payday loans and cash advance would be a great help in paying your bills on time even though you haven’t enough money left on your pocket.
Posted on June 16th, 2008 at 7:46 am
If I was considering whether to buy or rent, I would try my best to buy due to the great deals available through bank owned homes and the overall price of homes nationwide. However, many would be buyers won’t be approved by lender because of increasingly more strict qualifications, and in this case individuals who don’t qualify have no option but to rent.
Posted on June 18th, 2008 at 10:25 pm
Pay day loans is also called a pay check advance or payday advance. In different parts of the world, it is a very controversial issue. It faces both legal battles and public perception challenges in nearly every place where it is practiced. Many criticizing the payday lending market for high APRs and for locking customers into a “cycle of credit dependency” As above said, Use it correctly!
Posted on June 20th, 2008 at 7:16 am
There is a great widget on Google to show if you should rent or buy. I was surprised to find that even when I was renting a small studio apartment 5 years ago for $360/month that I am still better off as a home owner with a $1500/month mortgage. That applies even if I stay put in my home for 3 years!
Christina
Posted on June 20th, 2008 at 7:39 am
First of all “pay day loans” are probably the most evil of all types of laons that I have heard of. And as an appraiser who has dealt with 300+ clients, most of whom are lenders, I should know.
That issue aside, I have always been of the mind that the benifits of home owership greatly out weigh the costs. Now, that is not to say that home ownership is for every one, if you are a complete stranger to a hammer, cleaning products, or any type of physical work you might have some difficulty with owning a home.
One solution, for those who want to learn these skills, is to find out if any of your friends or co-workers are handy-persons. Another solution is of course to have lots of money to pay someone to do everything for you, (this is not going to work for everyone for obvious reasons.)
But if you have the dsire to learn how to do some basic home maintenance, and are the type of self-motivated person who can rise to the challenge when presented with a problem then I strongly believe that you can be a home owner. So go out there and get a piece of the american dream!
Posted on June 26th, 2008 at 9:02 pm
It is interesting that renting property is starting to become more popular once again. In parts of Europe home ownership is does not have the same significance as it does in the US.
Posted on July 2nd, 2008 at 12:49 pm
Right - payday loans often seem to help more then they hurt, as people are largely unable to handle them. That said, this was a good look at the pros and cons of both.
Posted on July 3rd, 2008 at 4:46 pm
I think for many because of the mortgage problems and the economy renting is their only option when just two years ago they easily could have bought a house.
Posted on July 4th, 2008 at 6:05 pm
the uk market is also in the same boat im affraid , but it will improve with time i hope.
Posted on July 8th, 2008 at 8:04 pm
Renting is the better solution for young couples.
Posted on July 10th, 2008 at 5:21 pm
I read an interesting article on CNN today that mentioned a good way to determine whether to rent or buy is by using the price-to-rent ratio. Take the annual rental rate and divide it into the market value of the house/condo. Your target is to be under 15%. I see some decent markets at around 12% right now. Many are near 20% though so it shows that renting is a good idea in some metro markets.
Posted on July 16th, 2008 at 2:17 pm
It is almost always better to own, but with prices falling in some areas there must be a few happy renters too! Still, long term you can’t go wrong owning your own home.
Posted on July 18th, 2008 at 5:49 pm
Renting vs. Owning your Home - here in Thailand the property prices are rising and rising, it is much better you buy and watch the value of your home increasing every year. Quite often you can even resell your house after a year or two with 20 - 30% profit!
Posted on July 20th, 2008 at 9:19 am
Renting is for young people, buying is for older people. Because when your young you don’t know where you might end up, what state you might be getting a Job in. If you buy a house and make that commitment when your young, then you will get tied down. But for older people who there life’s are stable, ofcourse buying a house is the right thing to do.
Posted on July 22nd, 2008 at 4:30 pm
Renting is good for those that aren’t ready to plant roots. Once you are fairly sure that you will stay in an area for more then a few years if you can afford to homeownership is the way to go. If renting or owning you are paying a mortgage, the only difference is when renting you are the one building equity.
Posted on July 22nd, 2008 at 6:20 pm
Payday loan companies are nothing more than legal loan sharks. Anyone that uses these places obviously can’t afford to own a home since they can’t manager their money to prevent from having to use them.
Posted on July 24th, 2008 at 7:24 pm