If you are still considering if you should buy a house or rent one, here is a few points to get you to make up your mind:
You will always need a place to live. You will have to choose between renting and buying at some stage or another. Your mother could kick you out of your room at any moment, after all!
The choices available are simply renting or buying. And both options have benefits and disadvantages. It is up to you to choose the one that is best for you.
Renting is usually cheaper than buying. But rents tend to rise over time. Your rent will typically increase every year, at a rate that compares to inflation. And your rent will, typically, never drop. Once you buy your own home, you get your ticket to climb off the rental escalator.
Rents don't decrease. And when they do, you'd probably be considering moving anyway, because your neighbourhood would resemble a war zone, a toxic waste dump, or a social experiment that went wrong.
When you buy your own home, you guarantee that things won't get worse for you. You only borrow a fixed amount of money, so unless you decide to cash out some of your equity, you should never owe more money than when you started out. And your monthly payments are calculated on the amount of money you owe the bank.
Interest rates increase AND decrease. So, sometimes you might have to pay a little more than you used to, but other times you might be paying less. At least you can be sure that there will be no inflation related escalation in your monthly payments.
So buying a home puts a stop to a worsening situation. But how does owning a house make your situation better?
Well, duh! If rents keep rising while your monthly mortgage repayments remain stable, you are winning already. But in the long run, owning a home of your own really pays off. Within a few years, your house will have increased in value and that value is all yours.
Careful now! Property prices don't always rise. House prices can fall just as easily. But in the long term, property prices tend to rise. This happens for all sorts of reasons, such as inflation, higher potential for rental income, and so on. But one of the main reasons why real estate prices have rather consistently increased throughout history, is the fact that there is a limited supply and a ever growing demand.
There is little or no cost involved in renting a home, but all kinds of costs apply when buying or selling a home. But returns from owning real estate can quickly cover the transaction costs involved. If you sell your house after owning it for only a short while, you will probably lose money. Buying costs money and so does selling property. So, you won't immediately realise a profit from your home.
If you, however, sell property after owning it a number of years, the average person will realise a profit above any reasonable return they can earn with any of the other asset classes. Why so? Because your investment in your property is "leveraged", because you buy the property with borrowed money.
Once you have bought a home, the appreciation belongs to you. So, when you buy, you get a return on your housing payments, but if you choose to rent, you get nothing.
