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Rent vs. Mortgage: The Differences

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When you’re just starting out, the question of whether to rent or take out a loan can feel intimidating. And with housing market predictions for 2018 looking the way they do, it can feel like an even bigger decision.

So when it comes down to it, do you rent or take out a loan and buy? It depends on what your goals are.

Rent

Benefits

Real estate is the original illiquid asset. Unless, of course, you rent. If you want to relocate, it’s a lot easier if you don’t have to sell it first. You tell your landlord you won’t be renewing your lease and move on.

However, let’s talk about the myth that you’re throwing away money by renting. Consider this: how much will you have to pay for a mortgage every month?

Regardless of where you live, it costs money. Knowing that up front will make your life a lot easier. And when you rent, you don’t have to worry about things like homeowners insurance, trash pickup, repairs or sewage service.

Renting often a better option for younger individuals or those who don’t have the finances, time or interest in maintaining a property themselves.

Downsides

The plus side is that someone else has set up everything for you. And the downside of renting is exactly that. You have to live your life by someone else’s rules (like paying pet rent and the inability to repaint). You’re also stuck scrambling if your landlord decides to sell the property or remodel. There’s also the fact that, for all the convenience afforded by renting, you have no equity available to you when you move.

Mortgage

Benefits

All that in mind, there are times when the price tag for taking out a loan is actually cheaper than paying rent once a month. This depends on where you are located. You’re also your own landlord. You can make changes to your house however you see fit. Buying a home also comes with more than just pride — it comes with certain tax benefits.

Downsides

With great power comes great responsibility. As in, more responsibility than just the mortgage. You’ve also got to worry about insurance, maintenance and homeowners’ association dues. There’s also less flexibility if it comes time to move. If you want to move, you have to put your home on the market and jump through all the hoops. And job-wise, you’re pretty much tied to an area once you buy.

Real estate can be complex, but it doesn’t have to be as scary as it seems. To see our currently listed properties, click here.

For more on this subject, read our recent blog, “4 Tips to Find the Right Real Estate Agent.”

Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Our team of local experts will ensure that you have a successful real estate transaction. Call us today at (858) 361-5561 or email us anytime by clicking here.