Renting a Home vs. Ownership: Biggest Question for Retirees

After getting retired or while approaching retirement, one of the biggest questions that are faced by people is where to live. Whether they should down size their property, keep the family house or whether they should rent a space. With the increase in the stress level and expenses, it becomes difficult for them to keep their home and maintain it in its best condition. So if you are also approaching your retirement, read on to this article to weigh all the option before making a decision.

Think about some simple things

To simplify your decision of selecting the option of home ownership or renting, there are few points that must be remembered. Although this can be considered as an important choice, the opportunities and the drawbacks that comes with both the options must be examine from the big-picture view point. Some important questions that you must answer are:

• Do you have a budget to pay the ownership taxes every year?
• Do you view your home as an investment or not?
• Are you aware of the risks that are attached with the home ownership?

The tax expectations

The first step is to analyze the amount of money that would be required to pay as the taxes. As property taxes and mortgage interest are tax deductible, having knowledge about after-tax cost is important. Calculating the taxes can be a complicated situation therefore it is advisable to take the help of a financial advisor who is well versed with his field. While calculating the taxes, the cash flow situation must also be taken into consideration.

Certain risks that must be considered

Home ownership has a large number of advantages over renting and one of the most important advantages is that you get more out of your money. But it also comes with its set of financial risks. Different issues such as unexpected maintenance costs, fluctuation in market price and insurance deductibles add up to become huge expenses for homeowners while these expenses does not matter to the tenant. However if you choose to buy a house, do not forget to shop for best mortgage rates and homes before zeroing onto a property.

Liquidity and cashing out

An additional advantage of being a tenant is that you do not have to worry about the fluctuating market condition as you do not stand the chance of losing anything. Moreover tenants are also not required to worry about liquidity. The home selling process can take up a large amount of time and in addition it also involves lengthy paperwork. However as a tenant, you need not to worry about anything as you can simply side step this situation and move on to your new home.

So when it comes to making a choice between the two, make some calculations before reaching a decision. If you can easily afford the monetary risks of maintain your house, you can opt for the ownership option. But if you do not have enough money to deal with sudden expenses or tax payments, choosing the other option would be a great deal.

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