It is the American Dream to own a home, and it is influenced heavily in today’s society. Commercials for home furniture to home makeover ideas inspire one’s imagination and creativity to run wild and become over ambitious. It seems to be the classic trademark of the American Dream, to be independent and to have a sense of belonging and possession, to do with as one would please. However, what are the viable and cost effective options between home ownership and renting? It seems as though when analyzed that there are more differences than there are truly similarities.
Similarly, in both home ownership and renting, one wants a warm, inviting, comfortable, and safe home, a place to either start a new family or raise an existing one. Dissimilarly, home ownership and renting are set apart by the many fees and the unique characteristics that come with each one. Fees vary greatly from home ownership to renting, and are primarily the largest aspect considered when deciding between wether home ownership or renting is right.
Home ownership carries an annual property tax which is a fluctuating percentage calculated on the assessed home value.
Renters are not likely to pay directly for property tax; however, it can sometimes be built into the rental price. Sales tax will be seen upfront as part of the closing cost associated with home buying. Contrary, renters will not have to worry about sales tax at all. Home Owner Association Fees, if any, are primarily paid by the property owner annually. Renters should not be effected by HOA fees although it can sometimes be built into the rental price as well. Home owners insurance covers the homeowner in the event of property damage, but does not cover the renters personal possessions in the property.
Renters do not pay for the home owners insurance directly, but again can be built into the rental price. Renters concerned about personal property damage can get a renters insurance policy inexpensively. A more notable difference is within the mortgage and interest rates compared to the monthly rental cost. It is not unusual to see a lower mortgage rate, but it should be noted that the total cost is spread over a financing term, normally thirty years, with interest on top. Monthly rental fees are usually all of the owners combined expenses, such as mortgage and nterest rate, HOA fee, home owners insurance, and property tax. After reviewing this, one might say a renter does not benefit as all the cost are passed onto the renter. However, most homes will rent for market value which normally tends to be lower than the property owners actual cost. This is where a renter benefits as most property owners just break even or end up paying out of pocket on top of the monthly rent. Many unique characteristics appear from a home ownership or rental point of view that can effect ones decision.
Majority of situations, owners make the rules for the property with renters having to strictly abide by them. For example, renters whom have pets can make or break a rental agreement which are a decision by the property owner to allow with little say by the renter. In most rental properties, the home owner will be solely responsible for maintenance request on the property, and it can be challenging as a renter to get problems addressed in a timely manner. A major aspect to consider is the customization of a rental property since most wners are reluctant to spend extra money to meet and satisfy the particular needs of a renter. In nearly all instances, owners have the upper hand and the ultimate voice in the matter with renters having to strictly conform to the home owners policy. Home ownership and renting are two viable ways in obtaining the American Dreams. Although they are not without their setbacks, they do both carry positive aspects that should be carefully outweighed when deciding between home ownership and renting. Every individuals particular needs vary from person to person, and what is important to one could be irrelevant to another.
Cite this Home Ownership vs. Renting
Home Ownership vs. Renting. (2017, Mar 19). Retrieved from https://graduateway.com/home-ownership-vs-renting/