Most people face the essential decision of considering whether they should own a home of their own, or whether they would be better off renting. Many factors and considerations are involved, and while this is a rather complex decision, the vast majority, do not pay keen attention to the relevant components and considerations, but often proceed in a somewhat compulsive, emotional manner. Since for most their house represents their single largest financial asset, wouldn’t it make sense for people to proceed with their eyes wide open, and ready to proceed in a well prepared, objectively introspective way. With that in mind, this article will attempt to briefly examine and consider four reasons to own a home versus four reasons why one might be better off renting.
Renting: We will try to consider 4 basic reasons, one might prefer to rent:
Lack downpayment: Most people use a mortgage in order to help them buy a house. However, many do not have the funds to put downpayment, because with the costs of today’s real estate, the usual downpayment is often challenging to come up with. For example, the conventional 25% down, on a AED 1,000,000 mortgage, is AED 250,000. In addition to that, individuals must have extra money, for the closing costs, as well as the reserves many lending institutions require.
Unclear about employment/ future: When one is uncertain about either his job security, or if he might be relocating, he might not want, or be wise to own if the residence will be somewhat shorter term.
Don’t want responsibility of ownership: Some aren’t ready, or prepared for the responsibility of ownership. If owning puts an emotional strain on someone, they might be wiser to address these issues prior to making the commitment of buying a home.
Need to save more: It’s never a smart idea, to become house rich, and monies poor! Take the time and be disciplined enough to save and preserve sufficient funds to comfortably afford the anticipated monthly expenses and costs when you are ready, to take the leap!
Buy/ Own: Now, that we have examined 4 reasons for renting, we’ll examine 4, for buying, instead:
Pride of ownership: For many people owning a home creates a personally satisfying pride of ownership! We often have heard of the Dubai Dream and this for many is an essential component.
Build equity: When one rents everything paid goes to someone else, but when we own we gain equity. Since historically the value of real estate has at least kept up with inflation when one buys, he builds equity and gains a financial asset.
Privacy: How important and what value do you place on your personal privacy?
Family needs: Some might decide to make the leap because they need more space, or want pets (which often rentals prohibit), or some other personal reasons.
There is no one-size-fits-all formula for determining whether you should own a home, or rent one. Hopefully, this article might provide some additional insight as to how to proceed.
