Costs of buying vs renting a house
It’s quite predictable that a young person beginning his independent life, building his career and about to start a family wouldn’t have the luxury of owning a home due to the massive upfront costs of purchasing a house but, does that mean renting is not as costly?
In some cases stated in the previous article, renting would actually be better for you. But, to really decide that, you should first learn about all the hidden costs attached to each option.
Costs of buying:
- High upfront and initial costs shaped in: Down Payment and Propery taxes.The down payment associated with the purchase of a house is usually the highest cost of home ownership however, it decreases the loss accompanied with costs of the upcoming categories.
- Low recurring Costs: Loan payments, Maintenance costs and Utilities (water, gas, internet,..)The highest recurring cost of home ownership is the loan payments but, eventually they end when the house becomes yours.Maintenance costs and utilities are not a waste of money as you get to maintain your own home.
- One-time costs: Furnishing, Moving costs, Repairs, Improvements and Renovation.While you are furnishing your home, you don’t have to worry about spending too much on it as these costs add value to your place.
Costs of renting:
- Low Up-front and initial costs shaped in: One month’s rent as a Security deposit and first month’s rent and moving costs.Unlike home ownership, moving costs are hectic as you pay for moving in and moving out again after your rental period. On the other hand, the other up-front costs are very low.
- High recurring costs shaped in: Monthly rent, monthly utilities costs and damage costs.Having to pay a monthly rent for your stay in the house is the most irritating liability to home renters as it is an indefinitely wasted cost.
- There are no one-time costs in renting.
How cheap is renting or buying depends on one simple thing, will you stay in the house long enough to cover its up-front costs? The benefits of buying are only valid if you’re going to settle in the place for a long time, otherwise, it’s so much cheaper to rent.