Rent or Buy a home?

The question that faces most first time home buyers is; should I continue to rent or should I take on buying a home?

Let’s go through the advantages and disadvantages of both buying and renting:

Advantages of Buying:

  1. Currently you can buy a bigger home for less than what you are paying in rent.
  2. You can move out of your parent’s basement if you are currently living at home.
  3. You can choose to have no roommates.
  4. More privacy from people.
  5. You can find a home or townhome with a garage and you won’t have to fight for parking stalls and your car will be warm and clean in the winter.
  6. You can have as many pets (any size) that are allowed by city and county.
  7. Your mortgage payments are going to pay down your mortgage.  I know this may hard to believe but all real estate goes up in value over time. It has crashed several times in the last 100 hundred years, but it goes up and if your mortgage is going down and you sell at the right time, you will make money.
  8. You can do what you want with the property (No association) and that is allowed by your mortgage.
  9. You can write off the mortgage interest which decreases what you owe in income taxes.
  10. Mortgage interest rates are locked for 30 years so the only thing that may go up is property taxes, but this is normal minor compared to rent hikes.
  11. Typically you can expect to have the same neighbors, when renting you may get someone next to you that have a different lifestyle than you.

Disadvantages to buying:

  1. You have to come up with 3-20% of the purchase price (Can be gifts funds from relative or down payment assistance program).
  2. Your parents may have to approve of the house if they are giving you the down payment.
  3. You will have to budget for up keep on a property.  Most major items will last for 20-30 years but houses do have wear and tear and water heaters, furnaces, siding do have to be replaced every so often.  Townhomes have less maintenance since the outside is covered by the association, but there may be restrictions on pets, cars and other items on the exterior.
  4. Depending on your job status, it may be harder to just pack up and sell.
  5. You may have to mow your lawn and shovel your driveway.
  6. Your price range may not allow you to live in neighbors that you can afford to rent in.

Advantages to Renting:

  1. You know when the end of your lease is and you can do job transfers easier.
  2. It is a more temporary leaving situation.
  3. You may be able to live in a nicer place with a roommate.
  4. The landlord has to take care of the lawn and maintenance depending on your lease.

Disadvantage to renting:

  1. Limits on pets and yard space.
  2. Limits on parking.
  3. Shared walls which limit your privacy.
  4. Rent trends go up and down depending on the market value.
  5. Having a roommate.
  6. Outside parking in the winter.
  7. Monthly parking fee.

We have helped both buyers and sellers determine which the right directions they should take.  Some people are right to buy and others may be better off renting.  Buying a home is not for everyone.   The biggest factor that effects most of our clients decide is the amount of rent they are paying per month compared to how much home their home payment.

We work with home mortgage specialist that can you dial in your payment before you start even looking at homes so you will know what it will cost per month with your mortgage payment that will include your taxes and insurance.  You will just need to estimate how much gas, electric and water will be.  The local gas and electric company can give you an estimate of the homes yearly expenses.

Let us know how we can help.