Five Questions to Ask Yourself before Making a Decision to Rent or Buy
Many have aspirations of owning a home one day so they can raise a family or settle down with a litter of puppies. With June being National Homeownership Month, now could be the time to jump the gun and purchase the home you’ve been dreaming of. Before signing on the dotted line though, be sure to know what goes into buying versus renting.
Both renting and buying have multiple pros and cons and there’s no definite answer on what the best option is as it depends on the individual’s situation. Before making any major decision, it’s important to consider your options.
Answering the following questions will give you a clearer idea of whether it’s time to buy a home:
How long are you planning to stay in the area? Knowing your future plans will allow you to better estimate the costs of renting vs. buying. The longer you stay in one area, the more time you have to spread out the costs of your mortgage. Most Realtors recommend staying in a home for at least five years to help reduce your debt and allow for price appreciation so you can get back the money you put into the home.
What are your reasons for wanting to buy a home? Homeownership comes with a lot of benefits; including being able to dictate what goes on in the house and having a private space to call your own. When renting, the landlord controls what you can or can’t do within the space from home renovations to whether or not pets are allowed. Having a house will allow you to be more independent, give you a sense of pride that comes with home ownership and provide a permanent space for you to raise a family.
Do you have the budget for all expenses? Buying a home is more than just your mortgage payments and down payment. You also need to pay closing costs of the home. Other expenses to keep in mind include property taxes, homeowners’ insurance, regular maintenance and future repairs. With renting, most maintenance and repairs are on the landlord, so be sure to budget accordingly for potential expenses.
How much money will you save on taxes? The interest rate paid on loans for mortgage payments, property taxes and some common charges are tax deductible. Be aware of what you are able to write off and whether it will offset some of the other expenses homeownership entails.
Will buying a home provide you with a big return on investment? Most homes will appreciate with time, though many factors go into that including mortgage and interest rates. Renting provides no investment opportunities and there’s always the risk of rent increases, so renting is a viable option for those who are not planning to stay in one area for an extended period of time. Owning a home will stabilize your cost of living and there are many chances to increase your home’s value, whether it’s from remodeling or being proactive with home maintenance.
Consult with a Long & Foster Realtor to get insights into your local community to see what’s best for you.
Your financial situation makes up a big part of whether you should rent or buy. Break down the different costs that go into both decisions and see how it will affect your wallet with Prosperity Home Mortgage’s Rent vs. Buy calculator, https://www.phmloans.com/calculators/buy-vs-rent-calculator.
Financial capabilities aside, there are a lot of different aspects to think through, so it’s important to do diligent research so you’re fully prepared for whichever decision you come to. There are many pros and cons to both situations, but knowing what your priorities are and what you want for the future will make the decision easier.