Rent vs Buy

Many consumers are finding themselves jumping into home-ownership quicker than they may have been planning due to the fact that renting costs are rising rapidly in a number of cities nationwide while mortgage rates are remaining fairly low. On the other hand, some still choose waiting for the housing market to recover even though there are enticing incentives involved with buying. There is actually no correct answer involved in the battle between buying a home and renting a home.

There are numerous considerations, as well as pros and cons on either side of the fence when anyone gets involved in this all-important question of rent vs own. The most significant factor of all would most certainly be your personal financial circumstances.

Owning a home can have a number of benefits, including:

1. Building equity: When you own a home, you can build equity over time as the value of your home increases and as you pay off your mortgage. This can provide a sense of financial security and can also be a source of funds if you decide to sell your home in the future.

2. Potential tax benefits: Homeowners may be able to claim a deduction on their federal income tax return for mortgage interest paid.

3. Personalization: When you own a home, you have the freedom to make changes and improvements to the property, which can increase its value and make it feel more like your own.

4. Stable housing costs: Rent can increase over time, but when you own a home, your mortgage payments are fixed for the life of the loan (assuming you have a fixed-rate mortgage). This can make it easier to budget for housing expenses.

However, owning a home also has its challenges and potential drawbacks, including:

1. Responsibility for maintenance and repairs: As a homeowner, you are responsible for all maintenance and repairs on the property, which can be costly.

2. Limited mobility: If you own a home, you may be tied to a particular location, which can be inconvenient if you need to move for work or other reasons.

3. Large upfront costs: Buying a home typically requires a down payment, closing costs, and other fees, which can be a significant financial burden.

Renting, on the other hand, has its own set of pros and cons. Some of the benefits of renting include:

1. Flexibility: Renting allows you to move more easily, whether you need to relocate for work or just want a change of scenery.

2. Lower upfront costs: Renting typically requires a smaller financial commitment upfront, as you only need to pay a security deposit and possibly first and last month's rent.

3. Fewer responsibilities: As a renter, you are generally not responsible for maintenance and repairs on the property, which can be a significant burden for homeowners.

However, there are also some drawbacks to renting, including:

1. Limited control over living space: As a renter, you may not be able to make certain changes or improvements to the property, and you may have to adhere to certain rules and regulations set by the landlord.

2. No equity: When you rent, you do not build equity in the property, so you do not benefit from any increase in its value.

3. Potential for rent increases: Rent can increase over time, which can make it difficult to budget for housing expenses in the long term.

The choice to purchase a home is a key decision in life and you don’t want to take it lightly, however rising rental costs and lower interest rates on mortgages could offer more affordability on the home buying front. It’s important to take into consideration all of the pros and cons related to both owning and renting. Long-term home-ownership could be effective in building wealth, which could then be utilized for funding a college education or your retirement. It could be end up being a savvy financial move for you if affording your housing payments is comfortable for you and you feel that you are ready for committing to home-ownership. And if you decide that you are ready, give me a call so that I can help you to realize your dream of buying a home. I’m here to help you even if you haven’t made your decision yet and need help with some of the above calculations.