Renting vs. Buying: What to Choose?

Calgary Neighborhood by Justin Scott Campbell
Calgary Neighborhood by Justin Scott
Campbell

Buying own home – who doesn’t dream about that? However, after financial crisis more and more people reconsider their dreams and realize that renting has advantages that are worth of giving up the own-home-dream at least temporarily. “With the tight credit market and stricter downpayment requirements, rent-to-own has emerged as a trend for people who otherwise would be home buyers,” said Eric Mangan for Forbes, spokesman for ForSaleByOwner.com, a real estate listing company.

No Investment

General belief that buying real estate will be always a great investment has finally changed with market conditions after financial crisis. Value of homes bought closely before housing bubble collapse is in most cases lower than the price their homeowners paid.

Renters rent. Homeowners pay.

When you buy a home, you have to usually take a loan and pay the mortgage for a long time, but there are also property taxes, home insurance and other mandatory costs you have to count in. General argument is that part of these costs are included in rent that renter has to pay. But not always. In some cases, if rents really cross border including all those costs, they become unattractive and are likely to discourage renters. Then landlords choose covering some of the fees to having their unit empty.

Dealing with Financial Problems

Calgary House by Kevin Saff
Calgary House by Kevin Saff

Of course, renters can’t be sure they can stay in their home forever. This decision lies in hands of their landlords. But the example of last financial crisis showed that homeowners can easily loose their homes as well. When renter looses job, he can try to make some deal with landlord until his situation gets better. When homeowner looses job, he has to go on paying mortgage fees and has a little chance to make a deal with financial institution.

Anyway, Buying is Still IN

Although buying seems to be really bad decision now, it isn’t so. People aren’t computers that count their costs and risks and then choose the best option. They have their dreams, they want to decide about their lives and not to leave their future in landlords’ hands, they want to change their homes without asking permissions. Most of renters don’t give up their dreams about living in own, they just postpone it. However, there is a little chance they will save enough money to cover all the costs when they finally decide to buy. Mortgage will be necessary. And will mortgage rates be on their record lowest levels as they are now?

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