February 23, 2023
For some, buying is better. Why? Much depends on your financial goals but you should also take into consideration aesthetics and practical concerns, too.
One argument favoring buying or building (on your own lot) a home with an FHA mortgage? The ability to modify your property without having to go running to the landlord to ask permission is a big one.
But some renters don’t realize that you can when you own your home, also apply for a refinance loan to repair or modify your property.
That is not something you can do with a rental unit. You’re basically at the mercy of the landlord in such cases.
Another argument in favor of buying a home with an FHA mortgage instead of renting? The ability to purchase a multi-unit home you can grow into instead of growing out of it.
Renters may or may not be allowed to sublet unused living units in their apartment–again, the permission of the property owner is critical. But when you own your home, you don’t need to ask permission to rent out a spare bedroom or two.
Some renters complain about paying property taxes on a home they own, but landlords may build in the expense of property taxes into their rent. In other words, you may be paying property taxes whether you intend to or not. Why not pay them directly instead?
Some renters complain that buying a home with an FHA mortgage would require them to pay for the FHA Mortage Insurance Premium. But when you rent, renters insurance is a cost to anticipate in addition to your security deposit, pet deposit, etc.
Comparing a regular mortgage insurance premium to a security deposit may seem a bit disingenuous as the deposit and other costs like it may only be a one-time charge.
But add the amount of your security deposit, pet deposit, and any other one-time charge including annual rent increases.
Remember, you won’t see dollar-for-dollar savings between the two, but you will see that in both cases, you’re required to make some payments. The real question here is whether you want to make those payments for something you actually own or not.
Renting means doing without certain things; sometimes that means you don’t have much of a yard (or any).
Sometimes it means putting up with appliances you feel are substandard or outdated, and sometimes it means waiting all day to get a simple toilet repair done because the landlord “knows a guy.”
Buying a home instead of renting it means doing some important homework before you get started; you’ll want to review your credit reports and payment history to make sure you have made on-time payments for the last year before the loan application.
You should consider when to start budgeting and planning for a down payment and begin researching neighborhoods to buy in rather than those to rent in.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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