If you’re a renter that’s interested in buying a home, or a homeowner considering whether renting would make more sense for your life circumstances, chances are you have evaluated the costs, benefits, and cons of owning versus renting your home. There are many advantages to both and making the right or wrong choice can have a great impact on your future.
Some helpful questions to aid your decision-making process are:
How much can you afford?
How much do you have saved?
How long do you plan on living in the home?
Does flexibility or stability mean more to you right now?
Are you prepared to be responsible for repairs/maintenance?
What are your long-term goals when it comes to career, finances, and family?
Here are some advantages and disadvantages of buying and renting.
The number one reason to buy a home is to build your overall wealth. According to the S&P 500 Index, the average return on investment in the US real estate market is 8.6%. This could be equity in your pocket when you go to sell your home or if you choose to refinance and use the earnings for remodeling, college savings, or more.
- Build equity and credit
- No landlord
- Tax benefits
- Remodel your home exactly how you want it
- Potential of earning rental income
- A sense of belonging to a community
- High upfront costs and paperwork
- Could possibly lose money if market values decline
- Extra fees and costs to upkeep home beyond the mortgage payment
While owning your own home can help you build wealth over time, it might not be the best option if you need more flexibility in your life. If you’re unsure of what may happen in your career, whether it be the stability of income or a potential cross-country move, it may be best to rent. Renting can give you peace of mind when life changes and you’ll spare yourself the headaches that come from home repairs and upkeep.
- Minimal upfront costs and paperwork
- Flexibility to move to different locations
- No exposure to market fluctuations
- Looser credit requirements
- No responsibility for maintenance and repairs
- No property taxes
- Potential of raised rent or selling of the property
- Limited choices depending on vacancy rates
- Feeling unsettled
- No equity
- No tax benefits
To further help you in deciding whether you should rent or buy, check out this great calculator from The New York Times. It helps you weigh the known costs as it relates to finances and time. Also, remember to take the time to have the right conversations with your loved ones before you rush into a huge life decision.
Ready to buy a home? Working with a mortgage loan company is the easiest way to get everything under way. We’d love to help you secure your financing, and we can help get you pre-qualified fast so you can put an offer on the right home when you find it. Best of luck and remember to talk to US first.