Whether to buy or rent a home is a difficult one. Most Indians would rather own a home than rent one. Both sides have their benefits and drawbacks. This article's goal is to compare and contrast the two options: renting vs buying.

5 Points To Clear The Doubt Between Renting vs Buying 

The 5 points mentioned below will give you a clear idea of whether to buy or rent a home.

1. Think About The Duration You Intend To Remain In Your Current Residence

In other words, do you intend to establish a permanent presence in your new neighborhood, or are you looking for a little more mobility?

Buy a home if you're confident staying in the same place for at least five years. You can personalize your home and make it feel like yours by adding your touches. It's a win-win situation for you both financially and emotionally .

Renting may be the best option for those who prefer to move around frequently. We can use the example of a job promotion that's halfway across the country as an example. Trying to sell your house simultaneously as starting a new job is not something you want to deal with. Perhaps you've just moved to a new neighborhood and want to spend some time getting to know it before deciding where to settle down.

2. Renting vs Buying: Estimate The Difference In Cost.

When it comes to upfront costs, renting a home may be more cost-effective than purchasing a property. Closing costs, down payment, moving expenses, and any renovations or other home upkeep, are all included.

A mortgage payment doesn't necessarily mean that you can afford a house. Additionally, you'll have property taxes, homeowners insurance, and (in many cases) mortgage insurance to pay, as well as homeowners association (HOA) fees, which can add up to a lot of money each month.

However, purchasing a home is almost always more cost-effective in the long run and allows you to accumulate equity. When you decide to sell your house, you want to do so for more money than you paid.It's less expensive to buy a house in most parts of the country. Mortgage payments for homeowners are lower than for renters after six years of ownership, according to a National Association of REALTORS® report. 

Rental costs are assumed to rise at 5% per year, while the homeowner's monthly payment remains the same. As a homeowner, you may also benefit from tax advantages, but the most recent tax changes may limit the amount of state and local property taxes and mortgage interest that you can write off. That report from the National Association of REALTORS® states that a homeowner's payment will be less than that of a renter's payment after three years.

However, that doesn't imply that you should jump right into the home-buying game. If you're determined to own a home, renting for a few years while saving up is perfectly acceptable. Assuming that you intend to stay in a home for the long term, homeownership can save you money in the long run.

You can save more money even with home maintenance costs if you pay off your mortgage and continue to live in your home.

3. Is Mobility More Important To You Than Setting Down Roots?

The future is unpredictable, even when you have the best of intentions. You should buy a house if you plan to stay in the same place for a long time and have the money to do so.

Looking at your current situation and whether or not it will change in the next few years is critical. As a result, you may want to postpone purchasing a home if your needs change.

You and your long-term partner recently got engaged and are planning to wed in the next two years. What should you do? Buying may not be the best option in this situation. Perhaps you and your partner want to figure out how to combine your finances and devise a budgeting strategy before you buy a house.

Or perhaps you and your spouse are newlyweds who haven't decided whether or not to start a family just yet. If you're thinking about starting a family shortly, don't buy a house that won't be able to accommodate your expanding family.

In either of these scenarios, renting might be an excellent option to give you the time to figure out what kind of home you want, how much you can afford, and what kind of lifestyle you hope to lead.

4. Renting vs Buying: The Risks of Each Option

Both are renting, and purchasing a home entails certain risks. Even though you can build equity in a property by purchasing it, some financial risks are. For example, if you sell your home earlier than expected, you may not be able to recoup the costs of closing or renovations.

Also, don't forget about the price of upkeep. You'll have to spend money on these things to keep the house in good shape. Consider, for example, performing maintenance on the HVAC system, fire alarms, landscaping, and the plumbing system.

If you have other priorities in life, like a career that requires frequent travel or a large family, it may not be the best idea to add home maintenance to your to-do list.

On the other hand, renting means, you'll never be able to accumulate wealth through ownership interests in real estate. Rent increases are possible at any time. Being forced out by your landlord or dealing with deferred maintenance requests puts you at the mercy of your landlord.

5. Have A Look At Your Financial Situation

When weighing the pros and cons of renting vs. buying a home, keep in mind that you must be honest about your financial situation. It would be best, to be honest with yourself about whether or not you can afford additional upfront costs, such as a down payment, repairs, moving costs, and new furnishings. To estimate your monthly payments and how much house, you can afford, use our Mortgage Calculator.

To ensure that you can afford either option, do some careful budgeting before deciding.

Final Verdict 

So buying a home is a better option when comparing renting vs buying. The emotional benefits of home ownership cannot be overstated. You and your family will benefit greatly from it, and it will serve as a safety net in the event of your death. If you decide to buy a home, do your research before settling on a builder, location, and floor plan.