For most, one of the biggest financial decisions you’ll ever make is deciding whether to rent or buy a home. Not an easy decision. Rising rents are being matched by rising home prices, so how do you decide? Here are some things to consider when making that decision.
It’s All About Timing
When you believe it may be time to buy a home, ask yourself some questions. Do you want to settle down? Or do you see yourself moving due to work or family reasons? Do you have a good amount of money saved up for a down payment? Or are you living paycheck to paycheck? These questions will help you make a sound financial decision when it comes to buying a home vs. renting one.
Can you afford to buy vs. rent?
According to the Huffington Post, the average home price in the United States is $188,900. However, in popular states such as California and our home of Colorado, the average prices are almost $400,000 according to Zillow. So, depending on your location, the prices for homes will differ greatly. Once you know where you want live as well as how long you plan to stay, you can evaluate whether you can afford to buy. Rent vs. buy calculators can help you determine more precisely the cost of buying vs. renting a home.
Benefits of Renting a Home
Renting a home offers many key benefits. First, there are fewer upfront fees than buying a home. Instead of a hefty down payment, you’ll need a security deposit and first month’s rent. Secondly, should you decide to move, the process is much easier than that of moving after purchasing a home. Simply pack your boxes and away you go once your lease is up. When renting, you also have no monetary responsibility when it comes to maintenance costs or repair bills. These expenses are covered by the landlord – providing you with extra savings opportunity and fewer headaches.
Benefits of Buying a Home
When buying a home, there are numerous advantages that come along with the purchase according to Forbes. First, homes typically appreciate over time, building your wealth. Also, your costs are predictable and can be planned for financially, rather than waiting for the next rent increase. Also, the interest and property tax portion of your mortgage payment is a tax deduction—a massive financial benefit. And finally, you have to live somewhere, so it’s nice to pay for your own place rather than paying your landlord.
When should you buy your own home?
Decided you’d rather own than rent? It’s important to make sure you’re ready. The article When am I ready to buy a home <LINK TO ARTICLE> gives you insight to what it takes to become a home owner and offers key questions to help determine if you’re ready. Our mortgage professionals are also a good resource to help you make this exciting decision.