Rent vs Buy
The Rent VS Purchase Decision
If you are a renter, you may have often wondered, should I stay put or jump into purchasing my own home? Which is better? Well, it depends. Which costs more? Well, it depends. There are a lot of factors to consider and renting works for people in many situations. Likewise, purchasing a home can be a great decision and investment for many. Keep reading for a quick breakdown of the important factors:
When renting, your costs are generally fixed for the term of the lease. In some cases, utilities (or a portion of them) are part of the fixed costs. Often, a large portion of rent and a security deposit is required up front. In most places, when a lease ends, the landlord is free to increase rent, and, at any
time, they can sell your home!
As a homeowner, the landlord (you) cannot sell without your permission. Usually, if you require financing, your payment will be fixed (although taxes and insurance costs can fluctuate). There are possible tax benefits to borrowing on a home and owners have an opportunity to build equity (when you owe less than your home’s value). Routine maintenance and improvements are the financial responsibility of the owner of a property.
Stability is a consideration when deciding to rent or own. School choice can play a role in deciding location, also. If you are considering moving soon, have a fluid job assignment/situation then renting probably makes sense. However, if you plan to live in the same place for several years, it may be time to consider a purchase.
If you own your home, you can also decide to rent out some or all of it, now or in the future. Rentals as a landlord CAN be a great investment (and the subject for an entire post). Owners have the ability to increase their home’s value by making improvements that others will find desirable. Home values also rise as the market rises. While a home is never guaranteed to appreciate, history shows that real estate can be a very stable investment.
Renters usually are required to pay some upfront money at the start of a lease but there are upfront costs to making a purchase as well. If financed, a down payment is often required (but not always). Speak with a trusted lender like one of our partners. There are also assistance programs for first time homebuyers. Beyond the down payment, there are expenses such as having your potential home thoroughly inspected, taxes, and insurance. Loans usually have some upfront costs too (usually referred to as closing costs).
One variable, however, that is hard to overlook, is the emotional factor involved in becoming a homeowner. The ability to walk through the door and declare “This is mine!” is a great feeling. Having control over the place you live cannot be undervalued. If you are weighing the decision, there are great tools to help you decide. Check out this rent vs. own calculator from Fairway Mortgage:
Want to talk with someone about your specific situation? Give us a call at the Miles & Smith Group. 502-890-5085. Our agents are experts in helping new and experienced buyers purchase the perfect home!