One of the biggest financial decisions that most adults face usually comes when looking for a home to live in. This is typically the age old question of “should I rent or should I buy my next home?” Sure, home ownership sounds like the typical American Dream and this is a huge goal of a large number of people; but it is important to remember that there are several factors that should be involved in this very important decision. Timing is very important here! BN Realty wants to help our readers determine what would be the best option for each individual. The following are questions to ask yourself when weighing the pros and cons of renting vs. buying.
Are you financially secure? You’ve probably heard your friends and family say that their mortgage is the same amount or less than what you’re paying monthly in rent. This is a very common situation and can sound appealing to renters everywhere! We urge you not to forget that there is more money involved in the purchase of a home than just the monthly mortgage payment. The traditional down payment for the purchase of a home is 20%. On a home with a purchase price of $100,000 that is a down payment of $20,000! Although it is true that there are more options than ever when it comes to getting a mortgage with a down payment of less than 20%, there is usually still expected to be a down payment of some amount. This means you’ll have to have some serious cash in your savings account. Aside from the down payment, there is the cost of home maintenance to consider. You will be responsible to the repairs on your home. This could include some high cost renovations if there is damage to the roof, foundation, plumbing, electrical or HVAC system. Again, this money would have to come from your savings if any issues arise. Property taxes and insurance are other costs that are involved with home ownership. Whether these are escrowed into your loan or not, you will ultimately be responsible for paying them.
Are you planning to stay in the same area for awhile? If not, renting may be a better option for you. There is not as much flexibility in buying and selling homes when compared to ending a lease in a rental home. If you have a sudden need to relocate, the selling process may take too long and may end up being expensive.
Is your job stable? This can tie into both of the questions above. If there is a change in your income or you are asked to relocate those could potentially bring up concerns for home owners.
If you’ve answered yes to the above questions- home ownership is probably the better option for you! Every time you make a payment towards your mortgage you are building equity in your home. If this money were to go towards a landlord instead; however, you are not benefitting from any long term financial gains and typically you will spend more money over time by renting. We hate to see clients “wasting” money on renting when they are in a great position to purchase a home and make an investment in themselves.
We know that this is not a one size fits all answer and that depending on each individual the answer to “should I rent or buy a home?” can change. We also know that there is no one better to help you answer this question than our agents at BN Realty. We understand that this is a very important question and are confident that a meeting with us will put you on the path towards making this decision. Please call us right away to set up a meeting! 309-319-6030