Should you rent or buy a home in Michigan? This question is commonly asked and for a good reason. It’s a major decision to purchase a home and is usually one of the biggest financial decisions someone has to make in their life. To best help you answer this question, I describe the pros and cons of both renting and buying.
PROS of RENTING
Easy To Move
One of the biggest benefits to renting is how easy it is to move on. When your lease is up and you’re ready to move, you can walk on out. If you aren’t sure how long you plan on living in an area, renting is probably your best option. Selling can be an expensive and timely process and usually not worth the hassle if you plan on only moving to an area for a year or so.
Another great benefit to renting is no maintenance. All homes will need maintenance and repairs, even new homes. When you rent a home, usually the maintenance is passed off to your landlord or property manager. Not having to pay for repairs or spend time doing maintenance is definitely a benefit to renting.
Small Upfront Payment
When you buy a home, usually you will need a little money saved up to use for the down payment, (not always, check out Michigan First Time Home Buyer Programs) when you rent a home, usually you will only need first month’s rent and the security deposit.
PROS of BUYING
Make It Yours, Anyway You Wish
When you buy a home, you can do anything you want to it! Yes, anything. You can paint it any color you want, hang anything on the walls, choose your own fixtures and you can have any pet you want! You will have the freedom to anything you want and that is one of the greatest benefits of being a homeowner.
Building Your Equity, Not Your Landlord’s
Every time you pay rent, you make your landlord a little richer. When you make your house payment, you build your own equity. A portion of every house payment you make goes towards paying down your mortgage and building your equity. When you get ready to sell, you can use your equity to move into a larger house, or if you’re staying put you could refinance take out some cash!
Payment Stays The Same Every Month
Landlord just raised your rent for the year? Can’t count how many times I have heard that. It’s very common your rent will go up if you stay at one home for a few years. When you purchase a house, most likely you will have a fixed rate mortgage which means your payment never increases! For the life of your mortgage you won’t have to worry about any payment increases.
CONS of RENTING
Not Your Own Home
Searching for freedom? Don’t rent! The chances of your landlord allowing your two big dogs, all of your cats, or letting you paint the home are very slim. When you rent you have limited freedom and will be expected to follow certain rules. When you buy a home, it is yours to do whatever you want with!
You absolutely love your home and the price you’re paying. You are planning on staying for a few years, until boom, your landlord raises the rent $200/month and your home no longer fits in your budget. Now you have no choice but to leave the home you fell in love with.
If you purchased the home, you could have avoided this situation using a fixed rate mortgage. Knowing your house payment won’t increase provides a comfortable feeling and you can be sure your payment will always fit your budget.
When you pay your landlord each month, that money is gone. It’s in his pockets. You built no equity. When you pay your mortgage down each month, you build your own equity when you’re ready to move, you have an asset to sell. When you’re moving out of your rental, you leave with zero equity.
CONS of BUYING
Large Down Payment
The biggest con to buying a home is the large upfront down payment. But this doesn’t have to be a con to buying a home. You can buy a house with as low as zero down. Michigan offers a few programs to help with a down payment, check them out here. You don’t have to have 20% down to buy a home anymore.
Owning a home does come with some responsibilities. Maintenance is something you should budget for and expect as a homeowner. You will have to cut the grass, shovel the snow, and do any necessary repairs. If your garbage disposal goes out, you can’t just call your landlord up and have a new one replaced for free. The benefit to this is that when you do replace your garbage disposal, you have the option to not only replace but upgrade garbage disposals to avoid future issues.
More Work + Money To Move
Selling your home can be a lot of work and costly. To get top dollar, you will have to spend some time preparing it to sell, sometimes that’s a quick cleaning or completing a full a list of repairs. If you have a full list of repairs to take care of your time and money spent can add up fast.
After reading the pros and cons of buying vs. renting, what do you think would be best for you? If you have a steady career and plan on sticking around the area for a while, it would be a wise decision to purchase a home and start building your equity. If your life is up in the air and you aren’t sure where you will end up in the next couple years, it wouldn’t be a bad decision to rent for a year or two until you find an area which you plan on staying in for a while.
If you feel like you are ready to stop renting and buy a home, check out these First Time Home Buyer Tips to help you get started.