The declining economy has been a hardship on many American families in terms of the housing market. With a record number of foreclosures and an abundance of houses for sale, it has quickly turned into a buyers’ market.
Many people are looking to buy a home because of the market driven low prices and the abundance of houses on the market. However, there are many unforeseen costs in owning a home compared to renting, that many renters are unaware of.
When calculating the difference between owning a home and renting, the price of the monthly mortgage is not the only expense to consider. However, it’s important to understand that the monthly mortgage amount can vary, unlike monthly rent. Taxes are a huge part in owning a home and it must be taken into consideration because of the added expense on the monthly mortgage payment. An affordably priced home can seem like it’s in your price range, but the taxes can spike up the monthly mortgage to become completely unaffordable.
Renters don’t have to worry about varying monthly payments because they do not have to pay taxes. Also, they are locked into the agreed price for the length of the lease.
Homeowners also have a variety of utility bill costs that renters do not have to pay. Many apartments include gas and heat in their monthly rent, but the costs the gas and energy costs for homeowners is much more than a rental apartment. On top of the increased utility bills for homeowners, there are also other utility bills that renters never knew about. Water and sewer bills can be a huge expense for homeowners and it’s something renters almost never have to pay.
Other things to think about when owning a home are all the maintenance costs that come into play. Renters never have to worry about upkeep or maintenance because there is a landlord or handyman they are able to call whenever anything breaks down or needs upgraded. However, owning a home means all of the maintenance duties and extra costs are solely on the homeowner.
The outside maintenance costs will start to add up quickly, depending on how large the outside area is in the home purchased. Costs can really start to skyrocket if the home is located within a community that requires home maintenance or association fees. Association fees will vary, but they are subject to change yearly and can sometimes be a couple hundred a month.
Owning a home is part of the American Dream, but in these difficult economic times it can sometimes be smarter to rent than buy. Usually people think of owning as a smarter investment because it builds equity. However, the housing market is very unstable at the moment and many homes are already depreciating in value. Some families owe more on their home than the house is worth.
Renters will pay lower costs in monthly utilities and they have the luxury of being able to move whenever the lease is up. Home owning is a wonderful thing, but it can sometimes be detrimental to finances and credit. It’s best to understand all the hidden fees and bills that can be included in owning a home before jumping into such a large purchase.