ENGL 1711 03

Matthew Oleson

Mary Crispin

ENGL 1711

6/23/2021

Buy or Rent

When looking for a new place, what is the best option? That all depends on what that person is looking for. A rented apartment will most likely be cheapest. A house, (rented or owned) can be similar or more expensive. This is influenced by size and amenities. These have significant differences based on your overall needs for a new place. Your decision may be swayed by money, accessibility, or a place to call your forever home.

One main difference when it comes to renting or buying, depends on a credit check. When you buy a house, there is a lot more in the background that needs to be done. You will most likely need good credit, if you don’t have good credit then you will need a co-signer. This is someone that the mortgage lender can fall back on if there are any issues with payment. If you don’t have access to either of those you will have to wait until you can build up your credit score. You will need a mortgage lender. A bank that will give you the money up front to purchase the house, then you pay it off in monthly installments. This is usually done over the span of 30 years, or 15 if you can afford a much higher payment. There will be interest added on to the principle (full balance of cost) which is negotiated at the beginning by the bank. This is a percentage of the full amount, split up, and added to each payment. Whereas if you rent, you will work with the apartment company or landlord (owner of the house) and play for a set amount each month. You will also need a credit check for renting, but they mostly just want to make sure you have an income, it is much easier to get credit clearance for renting than owning.

If you are buying instead of renting, the equity you are investing in can make you a profit at the end. Merriam-Webster’s dictionary definition of equity is “the money value of a property or of an interest in a property in excess of claims or liens against it”. What that means is any property owned by a person, can be sold later for profit. This does not necessarily mean you can make a profit, but the availability is there. If I buy a house for $150,000 but then make it nicer and sell it 5/10 years down the road, I can potentially try to sell it for a higher price. This is not an option when renting, you pay the owner the price they want until you move out.

When buying a house there are three types of house people are generally looking for. First being a “starter home”. This is primarily a couple’s first home they can afford when early in their marriage, or long time through a relationship and want to start their family. Often times this is still early in their life and they may not have a set career yet, they may make decent enough money to afford the mortgage, but not make enough to buy their “forever home”. A starter home is an affordable house that you can start building credit and equity. It may not have the exact kitchen you want, or a few rooms not the “perfect” size etc., but it will get you by. A “flipper home” is most often bought by someone who can do repairs of the home for very cheap, or even do them all themselves. That way they maximize the profit for selling it later. This process is called “flipping”, they buy the house solely as a business transaction. The house is bought for a low price, it is fixed-up, then sold to someone else for a higher price. They may even keep the house after fixing it, become a landlord, and rent it out for tenants to live there. This route usually produces the most money. As a landlord, you get essentially free money. I say essentially because you still have to put money into it from time to time, but basically with the right tenants you will be getting paid for people to live in your house. The other gamble portion of this route is that renting is based on lease agreements, like I explained earlier. If the tenant’s lease expires and they choose not to renew it, the owner now has to find new tenants, or pay for that home without any income from it. A forever home is the home you can afford to be picky with. You can shop around a bit longer, so that you don’t have to make any sacrifices. This is the home you plan to live in for the next 20/30 years, raise your kids etc.

If you want a forever home, then apartment renting is probably not for you. The problem with that is you pay each month for the life of the lease, instead of having something that will eventually be paid off. This is the same for renting a house, unless you are doing something called “rent to own”. In this instance, the money put forth in rent goes to the principle of the mortgage the landlord owns. When that amount is paid off, the house now belongs to the tenant(s). Renting can be cheaper, but essentially you are throwing your money away in order to have a temporary living space. Apartments and houses are rented through a lease agreement. You agree on a window of time, at the end of this time you either extend the lease or find somewhere new to live.

There are many ways to live, renting or owning, house or apartment. Some, if not most, will even find themselves experiencing all of these types of living. It is truly up to you how you want to spend your money. I prefer to get the most out of my money, that is why I chose to buy and never rent again. Renting, to me, is too wasteful. Buying gives me options for the future and I am my own landlord. My forever home is in the future, will you choose to do the same?

Works Cited

“Equity.” Merriam-Webster.com Dictionary, Merriam-Webster,

https://www.merriam-webster.com/dictionary/equity. Updated 24 Jun. 2021.