How Much Easier Is It To Rent Than To Buy A Home?
If you have the money to buy a home and have found the perfect property but aren’t sure you’re ready to settle down, is it worth renting instead? Many potential homeowners face this question. Choosing to rent means paying money into a void, whereas you could own an asset instead. One thing that stops people from doing this is that it seems like a lot of work.
The truth is that if you use a broker, renting can be really easy. How much do brokers charge? They generally take commission off the value of the entire lease and can be expensive. But even if you don’t use a broker, renting is not difficult.
Buying a home, on the other hand, is much more challenging. There are many barriers to entry, and even if you are able to break through them, there are reasons many people choose to rent.
The first stage of buying a home is finding out just how much you can afford. To do so, you can go to your bank and ask them to pre-approve you for a home loan. They will give you an amount that they are willing to lend to you in order to buy your home.
This is possibly the easiest part of buying a home. If all the steps were like this, buying a home would not be much trouble at all. Your bank knows a lot about you and about the property market and can get back to you very quickly.
Once you know what you can afford, however, everything gets tougher.
From Pre-Approval to Ownership
If you think that being pre-approved means you’re ready to buy a home, you’ll be sorely surprised. Let’s say you found the perfect home in your price range. You can’t simply buy it yet. First you need to put in an offer, which is legally binding in some circumstances.
Once the offer is accepted, you still need to secure the loan. Then you begin on the paperwork involved in transferring a house into your name. At this point, you need lawyers to help you follow through. What you pay them is part of what we call ‘transfer costs’ and which significantly increase the amount of cash you need to drop in advance.
Your home needs to be registered with the relevant state authorities, and you need to start an account so that you can pay property taxes. You need to make sure the utility bills immediately start coming to you so that you don’t miss any.
At this point you can take ownership of your home.
If you rent, on the other hand, you have to negotiate a lease, sign it and pay a deposit. Then you simply move in on the agreed date.
Moving into a home you bought is also more difficult than moving into a home you rented. This is because the seller does not have the same kind of responsibility to ensure everything is clean and tidy. There are regulations requiring this but they know that, if they leave a mess, there is little you can do about it.
When you rent, on the other hand, it is the landlord’s responsibility to make sure you’re welcomed into a comfortable and clean home. Everything needs to be in working order, and you may even use some of their appliances if that was agreed upon.
Quite simply, renting is far easier than buying a home, and that’s even if you don’t use a broker to sort out all the logistics. This is why people tend to delay buying a home until they are sure they’re ready to settle down for a good few years.
This also only takes into account the process of buying the home. Once you own it, to take leave of it you have to go through the tough process of selling. Depending on the market, you may have to continue paying your mortgage for months before someone bites. Furthermore, if your home has lost value, you might struggle to pay off your loan when you sell it.
Renting is the most practical option for most people. Ideally, we would all be better off owning our homes, but it takes a lot of work to purchase a home.
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