Owning a home has always been a big part of the American Dream. But is it right for you? It is, after all, a major life decision that can impact your financial situation, your lifestyle, and even your personal goals. And, ultimately, depending on the person’s goals and financial situation, owning isn’t always better than renting a house. Although they both involve a monthly payment in the form of either rent or mortgage payment, there are some significant differences between the two – and you need to know what those differences are in order to make the right decision. So here are 5 key differences between renting a house and owning a house in Miami.
1. Equity Building
When people talk about the differences between renting a house and owning a house in Miami, one of the first topics to come up is the fact of equity building for homeowners. You just don’t get that when renting – but it’s not quite the benefit it once was.
“While buying a home to live in shouldn’t be viewed strictly as an investment, homebuyers can capitalize on the equity (or the home’s value minus what’s owed on the home) that accumulates over time. If your home value goes up, you’ll earn more when you sell.”
But with respect to home-ownership equity building, you should also keep in mind that interesting rates are rising and home values are beginning to cool a bit. And that means you’ll build equity at a slower rate than has been possible in the past few years. Also, “you likely won’t accumulate a large amount of equity right away. Instead, you’ll build equity as you make payments and reduce your outstanding mortgage balance over time. If you decide to sell in the first few years, you likely won’t receive this benefit. In fact, with closing costs, it generally takes several years to recoup your money and see any equity gains.”
2. Tax Benefits
Another key difference between renting a house and owning a house in Miami has to do with the tax benefits associated with owning.
“If you itemize deductions, you could lower your federal tax liability by taking the mortgage interest deduction. . . . [Y]you can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million [$500,000 if married filing separately]) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017.”
Still, higher property taxes in some areas can offset the tax benefits of owning a house, and renting may ultimately be cheaper. Be sure to consult a Miami agent to find out about property taxes in your area before making a move. Just call 305.771.1710 to discover more.
3. Maintenance Costs
And then there are the inevitable maintenance costs associated with owning your own home. In most cases, you don’t have such costs when renting a house.
“Homes need repairs and maintenance over time, and when you’re renting, those costs are generally the landlord’s responsibility. For instance, in an apartment, if the HVAC system or refrigerator breaks, the landlord has to fix it. On the other hand, as a homeowner, you’ll be on the hook for those repairs and ongoing seasonal maintenance, and this can add up fast. Even if you’re handy and plan to do your own upkeep, you might not be able to commit to this maintenance over time.”
4. Responsibility and Time Commitment
Owning a house, unlike renting a house, involves a lot of responsibility and a time commitment. So you have to determine whether or not you are willing to take on the responsibility and commit the time home ownership requires.
“If you like having your evenings and weekends to use as you please, if you work long hours, or if you travel frequently, then the time commitment that comes with home ownership may be more than you want to take on. There are always projects that you will need or want to take care of, from finding a plumber to replacing a rusted-out pipe and repainting the bedroom to mowing the lawn.”
5. Mobility (Or Not)
Similarly, with renting a house, you have a good amount of mobility, but not nearly so much when you own. When you rent, you can pack up and move pretty much anytime you want, but owning typically means you are more tied down, owing not in small part to the big financial commitment, the mortgage.
Here’s what the experts advise in this regard. “Even with the best of intentions, it’s hard to predict what can happen next in your life. If you intend to stay in one place for a long time and have the financial means to do so, buying a home makes the most sense. However, it’s important to take a look at your current life situation and think about whether or not it’ll change within the next few years. If it does, your housing needs could also change, and you may want to hold off on buying a home.”
Which Is Right for You?
So which is better – renting or owning? The answer is . . . it depends. There are a lot of variables you have to factor in such as local property taxes, your own financial situation, your goals and lifestyle, and so on. An experienced Miami agent can help you sort through all these and come to the right conclusion. So when you’re deciding between renting a house and owning a house in Miami, contact us today at 305.771.1710.