A very common question that I often answer for potential home buyers is whether or not they should continue to rent or purchase a home. And my answer usually comes down to this: It depends on you–your situation and your goals for the future.
There are many question you should ask yourself. Do you think you’re ready to move into the world of homeownership? Does your job require you to relocate frequently? Are you ready to “settle down” and raise a family? Not sure what you want to do yet? Answering these questions honestly can help you to make a decision that you can work with.
As a real estate professional, I do know that buying a home has real advantages in today’s market: Realtor.com reports that housing affordability is the best it’s been in nearly 30 years. Right now buyers can cash in on hefty price drops and rock-bottom mortgage interest rates–and many people don’t realize just how great the market is!
So should you rent or should you buy? The Our Family Place Home Buyer’s Information Center lists some of the pros and cons noted below, and I’ve added some of my own:
* You gain equity in your home through mortgage payments.
* Your home could be one of the best long-term investments you will ever make.
* You can decorate and remodel the way you want.
* You get homeowner tax breaks.
* You build your credit standing.
* You can improve your property using home equity loans.
* You gain independence and pride as a homeowner.
* You can transfer your property through your will.
* Your costs are variable.
* Your equity may change due to market conditions.
* You usually must sell your home to move.
* You handle maintenance and upkeep.
* You usually need more cash to get in.
* Your costs are fixed for the term of your rental.
* You don’t lose equity.
* You can move at the end of your lease term.
* You have fewer maintenance worries.
* You need less cash to get in.
* You never get equity.
* You can’t always decorate or remodel the way you want.
* You don’t get any tax breaks.
* Your lease is for a limited time period determined by your landlord.
* Your rent may go up at the end of your lease and other terms may change.
* Your landlord may not fix problems or invest in routine property maintenance.
* You normally can’t transfer your lease without the landlord’s OK.
* You may face eviction if you and your landlord have a dispute.
There are lots of variables to consider, and you’ll need to do your homework to decide what’s right for you. To put these pros and cons into dollar terms, try out this rent v. buy calculator. This is a useful tool to help you work with different scenarios and see what they mean for your finances and help you to make a decision.