When it comes to staying in a home in a new place, the first question that comes in your mind is whether to rent a home or buy a home. While you take out a home loan for owning a home, you have to take the best step forward so that you don't default on the monthly payments for which you have to take out yet another refinance loan. You've probably heard various statements that claim owning a home as a better option than renting it. But what are the financial implications that will support this statement and make a prospective home-buyer feel in favor of it? Read on the concerns of this article to know more.

The monthly costs of owning a house

When you own a house, the monthly costs that are associated with it are huge. If you add all the expenses of owning a house, this may be shocking enough for you. There are a number of fixed costs that you have to bear when you own a home. Have a look at some of them.

The home insurance payments:Yes, the mortgage loan lenders won't ever let you complete the deal on the mortgage unless you agree to pay the insurance payments. Therefore, you need to shop wisely. Though this is sometimes required by the homeowners, yet always it isn't a necessity. But if the mortgage lender insists you, you can easily take it out and then you're supposed to bear the payments throughout the term.

The PMI payments:If you haven't saved enough money and you're not able to pay down at least 20% of what you’re borrowing, you have to pay the PMI or the Private Mortgage Insurance. This is a financial tool that protects the lenders from the risk of the borrower's default. This may tack on a couple of hundred dollars every month.

The property taxes:Yes, these are something that can't be hidden either. Since you're staying in that property, you have to pay the taxes on the typically assessed value of the house. The property taxes can add hundreds of dollars to the already scheduled monthly payments.

Utilities and maintenance costs:When you're shifting from an apartment to a house, the extra square footage may translate into a huge utility bill. Apart from the utility bills, the maintenance costs are also something that you need to take into account when you calculate the financial implications of homeownership.

The monthly costs of renting a house

It is not that there are no costs in renting a home. However, most experts are of the opinion that the costs that you have to bear when you rent a home are much lower than that when you own a home. Check out the financial implications of renting a home.

The rent payments:In case of renting a home, your property taxes and insurance costs are zero. The rent that you have to pay will be clearly mentioned in the lease and will be paid at the interest rate stated in the lease. However, whenever you default on the rent payments, the owner may make any kind of changes to the agreement.

The utility and the maintenance costs:The utilities will usually vary from the home to the apartment size and to the highest extent, in case of rented apartment; you may just have to pay the electricity and the telephone bills. On the other hand, the maintenance costs are almost zero as this is the responsibility of your landlord.

Renter's insurance payments:Yes, you may sometimes need the renter's insurance payments and this may take away 33-45 dollars in a month.

Based on the above mentioned analysis, renting an apartment is certainly cheaper in comparison to owning a home, in terms of costs. However, when you rent an apartment, you can't build equity; rather your equity is being released. This is a disadvantage of renting a house. But when you're taking the final decision, formulate a budget and then take the best decision according to your needs.