Rent vs. Buy – Which is right for you?
Rent vs. buy (which is right for you?)
Renting vs. buying a home is a big decision, and there are pros and cons to each option. In recent years, a higher percentage of U.S. households were renting than at any point since 1965
Let’s look at the Pro’s & Con’s
Pros of Renting:
- Fewer upfront costs and paperwork
• Freedom to be more mobile
• Not responsible for maintenance, repairs
• No need to worry about falling home values
• Build credit (if your landlord reports rent payments to the credit bureaus)
• No property tax bills
Pros of buying:
- May build equity and credit
• No landlord to answer to
• More stability (especially with schools)
• Possible tax benefits
• Can improve or upgrade home to your taste
Cons of renting:
- Landlord can raise rent or sell the property
• Choices may be limited depending on vacancies
• Might have to move multiple times
• Don’t build equity
• No tax benefits
Cons of buying:
- Requires substantial money, paperwork upfront
• Could lose money if home values decline
• Extra expenses beyond mortgage payments
• Rising home prices and low inventory in many markets
• Responsible for repairs, remodeling
Is buying cheaper than renting?
- There are different costs associated with renting vs. buying, and they depend heavily on where you live and the local housing market. Using a rent vs. buy calculator can help you break down some of these expenses.
Most rental properties require a security deposit, for example, which protects the landlord against damage caused by the renter. You’ll usually put down the first and final month’s rent payments when you sign a lease. When evaluating a lease contract, ask if your monthly rent includes utilities such as water, electric, gas, cable, or internet. You may also consider in todays market the cost having to go through this whole process all over again a year from now or even sooner if your rental property get’s sold out from under you. This has been a serious problem facing families in our area.
For homebuyers, one of the biggest costs of homeownership is your monthly mortgage payment, which includes the loan’s principal and interest. Your payments can go up or down over time if your loan is variable-rate or your property taxes or homeowner’s insurance premiums change.
Having a sizeable down payment — anywhere from 3 percent to 20 percent of the home’s purchase price — is expected. If you put less than 20 percent down, your lender will typically require you to purchase private mortgage insurance, or PMI, which drives up your monthly payments, too.
During the home-buying process, the buyer will need to pay for a home inspection and for any quotes for repairs needed from contractors. They will also put down at least 1 percent of the sales price for earnest money.
As a homeowner, be prepared as well for some of the hidden expenses that come with homeownership that catch many first-time homebuyers off guard and may lead to buyer’s remorse.
If you’re purchasing a property in a homeowner’s association, or HOA, you’ll also need to factor in monthly HOA dues, which can cover services like landscaping, exterior maintenance, and community amenities.
Some factors to consider
Location
Location counts. Where you choose to live may decide the buy vs. rent question for you. In high-priced real estate markets like San Francisco, renting could be the only affordable option. In addition to home prices and monthly rents, important factors when deciding where to live include safe neighborhoods, good schools, proximity to public transportation, walkability, drive times to work, shopping and recreation. Also consider the supply of rentals or newly built homes: Are they appealing, plentiful and affordable? Style — of a home, an apartment, a town or a neighborhood — plays a role, too.
Intangibles
Some pieces of our decision are not easily quantifiable, but they could be the most important, such as:
- Stability (you, not the landlord, can choose when you’ll move)
- Financial predictability (a fixed-rate mortgage payment doesn’t change)
- Freedom to renovate
- Pride of ownership
- Growing home equity that you can borrow against
- Flexibility (renters are free to move and are exempt from home maintenance)
It’s normal to be cautious about buying a home right now!
I have put together a FREE workshop that you can access on your time at your convience that will guide you step by step through the whole process! There is a media type for everyone, with all the tips, tricks, checklists & planner sheets you need to be 100% confident about buying a home!
VIDEO’S- TEMPLATES- WORKBOOKS & MORE!
