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Should I Rent or Should I Buy?

It’s the age old question every potential homeowner wrestles with: should I rent or should I buy? Both renting and owning have their advantages and their drawbacks. While there’s not a one-size-fits-all answer, there are some key factors that anyone asking this question should consider.

How long are your likely to stay in your new home?

The financial advantages to buying a home get better the longer you stay in the home. This is how home equity works … When you first buy your home, the mortgage lender likely “owns” more of it than you do (due to the amount of borrowed money versus money you put down). Over time, your mortgage payment reduces the mortgage lender’s interest (or equity stake in the home) and conversely raises your equity.

How long will you enjoy this view?
How long will you enjoy this view?

Therefore, when you go to sell the home more of the money goes to your pocket and less goes toward any remaining mortgage. This gives you more purchase power for your next home. Heck, who doesn’t want to get a nice check when they sell their home?

In considering how long you will stay, be sure to consider the following factors: your current employment, career path, local economy, and your personal situation (married or unmarried). It’s important to be realistic with yourself if any of these are likely to change in the next couple of years.

Would you be content if you needed to stay longer?

Most first time homebuyers purchase what is commonly thought of as a “starter home.” This might be a smaller house (1 or 2 bedrooms), a condominium or a duplex.  Any of these options can make a great first home. Many people live happily in their first home for years.

BUT will YOU be like most people? If you’re looking at your potential first home and saying to yourself, “it’ll be OK for a few years,” you may want to pause. Such a sentiment could be a red flag that if circumstances changed and you needed to stay in your first home longer, you might be very disappointed. Maybe that first home isn’t really the one you want. Maybe you need to keep shopping. Maybe you need to continue to rent and wait until you can afford the one you’d be really be happy in.

Do you have savings for a down payment?

The old adage here is still good math — coming with a down payment at least equivalent to 20% of the purchase price puts the buyer in the best situation. It is possible to purchase and put down a smaller down payment. There are programs out there for first time homeowners, military veterans, and others that can help you still buy with a smaller down payment.

But be cautious. There were two fatal mistakes that too many homeowners made prior to the 2008 housing crisis: overextending themselves into monthly payments they could not afford and not bringing enough (or any) down payment to the purchase. It’s always a good idea to speak with a qualified lender prior to doing any serious home shopping.

Do you have money put aside for routine home repairs?

Home repairs are a fact of ownership
Home repairs are a fact of ownership

If you’ve been a tenant for some time, you may have gotten comfortable with someone else flipping the bill for minor and major home repairs. Water heater goes out? Not your problem. Pipes freeze and burst? You make the call and the landlord pays the bill. The list goes on.

Well once you become a homeowner, the landlord (and his wallet) goes away. Now when those repairs are needed, and they will be needed, all that cost falls on you. And don’t for a minute think home insurance is the answer. Your homeowners insurance is for catastrophic losses not caused by “wear and tear.” And all policies come with a deductible which means you’ll be paying the first few dollars anyway.

How do the monthly costs compare?

It’s a common knowledge that the vast majority of people do NOT like to create or live by a budget. Even if you’re like the majority of people, doing the budget exercise is critical before you purchase a new home. There are plenty of budget worksheets available for free on the Internet. It’s worth your time and effort to itemize all your current monthly expenses.  Then compare those expenses with the proposed/potential expenses of owning a home.

Buying a home doesn’t necessarily need to be the less expensive option. In fact, in many cases it will not. But you should be aware of the cost difference and be able to manage your new budget. Nothing dampens the excitement of a new home like the fear that you won’t be able to afford it.


The dream of owning that home is so much sweeter when you act with the confidence of knowing it’s the right decision for you. Taking some time to consider these key questions, as well as weighing the pros and cons, will go a long way in making your buying experience a positive one. When you are ready to start the process of buying a home, I want to be the trusted advisor you can count on.



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The BN Realty Group at RE/MAX Rising - Bloomington, IL

Please allow me the opportunity to become your trusted partner and Real Estate Broker in all of your real estate transactions in the Bloomington Normal IL area and all of Central Illinois. I look forward to working together soon.

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