Home Improvement

Is Mortgage Cheaper than Renting in Dallas, Texas?

Purchasing a home or property is one of the biggest financial decisions one makes in his/her lifetime. But, when it comes to purchasing or renting, the main questions of homeowners are, “Can I afford this property?” and “How will I be financing my new house?”. 

In most cases, people opt for either a mortgage by a Dallas-based mortgage lending company or just renting out a property rather than buying it. But, which is cheaper?

This article is going to tell you all about the mortgage and renting, especially whether the mortgage is actually cheaper than renting in Dallas, Texas:

Renting

Let’s first talk about renting out a property. When renting, you move without penalty at the end of your lease. However, you might have to move out in a short period of time in case your landlord decides to due to various reasons, such as them rebuilding the property or even selling it off. Or, you can even be asked to move out upon making too much noise.

Not only this, but in the worst-case scenarios, your rent could even increase if your landlord decides to, to amounts that you might not be able to even afford. 

The reason for this is due to the high value of the average property. There has been a drastic rise in buy-to-let properties and real estate, which is why more and more landlords are snapping up extra homes. Therefore, this increase in demand for rental homes results in a more competitive real estate market. Which ultimately leads to high rent.

With renting out a property, you’re obviously not buying your equity over the period of time unlike in mortgages, but you’re only spending money for just living in the property for a specific period of time. 

When you rent out a property, you will have a fair idea of how much money you’ll be putting and spending each month. But, when you’ve opted for a mortgage, you won’t necessarily have to pay for anything else other than your mortgage amount and the regular utility bills and property tax. But usually, you might need to spend a considerable amount of money the next month (can go up to $1000). Moreover, your home insurance will not be able to cover this cost.

Apart from this, when renting out, you won’t really have to pay for any repair, replacement or maintenance costs. Your landlord will be taking care of it. For instance, if you have a leaked ceiling, your landlord will be responsible for getting it fixed. Therefore, your monthly spendings, expenses, and renter’s insurance are more predictable than when you opt for a mortgage.

However, the biggest downside to renting out a property is unforeseen and unpredicted rent increases, especially when your lease is up for renewal. This is more undesirable when you’re renting out a property in a posh area, where rent can rise drastically.

Mortgage

Going for a mortgage is basically like purchasing your home equity overtime. Owning a home brings numerous financial benefits, for instance, stability, greater security, and so on. Take it more like an investment for your future.

Where the cost of rent can increase significantly, here’s when a mortgage will be more beneficial. If you’re opting for a fixed-rate mortgage, then your monthly home payments will never increase.

Later on during your retirement age, you can also reverse this mortgage. A reverse mortgage works just the opposite- it helps you convert your home equity into cash. Now, this cash can be used to pay off your mortgage amount, and on anything else. This is not possible when you’re renting out a property.

But, owning a home through a mortgage won’t be desirable for those who tend to move out in less than 3 years. Also, property and real estate is the original illiquid asset. Therefore, even if you’re willing to, you still might not be able to sell your house to some other buyer if the real estate market is down. 

Mortgage itself includes numerous other payments and expenses on which you’ll have to spend money on. Such as property taxes, trash pickup, maintenance, pest and insecticide control. Pool cleaning and lawn maintenance, and insurance. This can surely increase your mortgage amount in total.

Therefore, with rent rates increasing after every short period of time, and its inability to give you more security and ownership. Going for a mortgage seems like a more safer and cheaper option in the long run. 

Not only are you investing in your future with a mortgage, but you’re basically owning a place for yourself. But, money should not be your only take on deciding between which one to choose. 

Think about the comfort, stability and security for the future when making a decision regarding your new home.

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