Rent Vs. Buy a Home
Personal circumstances vary. And whereas buying a home makes sense for one person, renting can make better sense for another. Weighing the pros and cons of both options can help you make an informed decision. Educate yourself on renting vs buying and make a decision that's best for your family.
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Credit Factors
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The credit requirements for buying a home are stricter, and lenders often look for a credit score of 680 or higher. On the other hand, apartment and housing landlords establish their own credit standards, and some pay little regards to credit history as long as an applicant has the finances to make the monthly rent payment.
Maintenance and Responsibility
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If an appliance stops working in a rental or if the property needs a new roof or other improvements, renters can call up their landlord and have him take care of the maintenance. Quite the contrary, owning a home means paying for repairs and improvements out of pocket; and having little cash savings can present problems with maintenance issues and repairs.
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Building Equity
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Owning a home is profitable as the property builds equity over the years. Equity refers to the difference between the home's worth and the mortgage balance. Buyers make monthly mortgage payments to help pay down the principal, and homes appreciate with time or gain value. Renters also pay money each month towards their dwelling, but because they don't own the property, they don't earn a profit upon moving from the home.
Expense
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Buying is a home is more expensive than renting a home. In fact, some people choose renting to avoid the huge expense associated with getting a mortgage loan. Buying a home involves paying a down payment, which can range from 5 to 20 percent of the sale price. Plus, there are closing fees paid to lenders or broker, which can cost 3 to 5 percent of the loan balance.
Flexibility
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Buying a property likely suits people who plan on living in the same place for several years. They can purchase a property and not worry about landlords selling the home or increasing the rent. On the other hand, people who enjoy the freedom of being able to pick up and move, or those who don't want to commit to one house or location may prefer the flexibility of renting a house or apartment.
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