Renting vs. Buying-Which is right for you?
If you’re a newcomer to the workforce, recent college grad, or entering a life transition, you’ll likely encounter a crossroads in terms of deciding whether to buy a home or rent. There’s more to consider than your income and price range here; one of the two options will in time prove to be a better decision than the other in many cases. Taking the time to break down the drawbacks and benefits associated with each choice may sound daunting, but it can quite literally save you thousands in the long run.
Are you on the fence of either option? If you’re contemplating the purchase of a home vs. renting, take a moment to consider these pros and cons of each.
Advantages of Owning a Home:
An undisputed advantage of owning your own property is the freedoms associated with it. Specifically, you can do far more to the home itself, be it renovating your kitchen, installing a pool, or repainting your exterior. Related benefits often include the option for animal lovers to house pets, smokers to smoke, and entertainers to host events at whichever capacity/frequency they please. Purchasing is also more synonymous with settling, so if you see yourself starting a family, buying a property may be in your best interest.
From a financial perspective, perhaps the best perk of being an owner is the home equity you are left with once you’ve paid off the property. Say someone transacts a 15 year mortgage and finishes their payments at the end of the period. In retrospect, they will have an asset on their hands usually worth around the same price (if not more) that they paid for all those years. To contrast, if the same individual rented that home for 15 years, they will have similarly made hundreds of monthly payments, but will be left without this valuable asset.
So, you’ll want to think about how much time you plan on living in a particular residence. On the subject of time, markets right now are pretty competitive, with rates still at all-time lows. For the house hunter, this means buying may be a better option than usual since rates are so low and owning a home may become more affordable than you thought possible. Remember that markets, of course, can fluctuate unpredictably, so keep this in mind and refresh rates weekly if you are pondering a mortgage.
There are a number of helpful calculators that will crunch the numbers for you in terms of pinpointing which may be a better option. By inputting your desired mortgage details and length of time you plan to spend there, you can see what your best course of action is. You can try the New York Times’ tool Here.
Advantages of Renting:
Renting certainly has some advantages to it, most notably; your landlord will incur expenses such as taxes, insurance, and more often than not, maintenance. The latter is a tremendous advantage to renting because you don’t necessarily have to worry about paying for this upkeep. Owning a home on the other hand, homeowners must always be prepared to fix chance complications such as a leaky faucet, insect infestation, or fallen tree in their yard. Renting may also be a better choice for someone due to the absence of a down payment related to purchasing. Especially for the young adult, coming up with a down payment on an estate can be a serious monetary task. However, although the typical conventional mortgage requires 20% for a down payment, there are a number of loan options out there that allow you to put down as little as 3% which means saving up for the down payment may be a bit easier to swallow in addition the monthly payments of the mortgage.
Finally, whereas buying is associated with settling, renting’s temporariness also serves as an advantage. Specifically, renters can relocate with much less hassle than homeowners. Selling a home can be a strenuous process depending on the state of the market. Conversely, renters can often relocate as soon as they find another property and even if they do happen to be bound by a contract; chances are it will only be a one-year or six-month agreement.
Debating to buy verses rent your property is not something to be overlooked. If you’re still unsure, let us at Poli Mortgage Group guide you down the correct path. Our experienced loan officers have helping potential home owners for over 15 years. Give us a call today at 866-353-7654!