BUY vs RENT: DECIDING TO BUY
Sometimes it’s hard to know which is best – to rent or to buy. While we won’t dive deep into the comparisons here, we will offer some questions to ponder in making this decision.
1) How long do you intend to stay in the location?
If you plan to stay a short amount of time, or even if your duration is unknown, it may be best to rent. Though the minimum time for a lease is usually 6-12 months, it’s much easier to move from an apartment or even rental home after a short duration than it is from purchasing a home and recouping costs such as closing costs, broker fees, and appraisal fees. Shorter durations just don’t allow for a home to gain enough equity to help these costs become a wash, or even walk away with a little money.
2) If you prefer to purchase, do you have savings (or resources) for a upfront costs?
When purchasing a home, a buyer will need money for things such as a down payment and/or closing costs (usually 3% to 5% of the loan amount). Though there are a times a lender can help a buyer be creative to help cover these costs, purchasing a home can certainly be more costly up front vs renting.
3) What is the monthly cost comparisons?
In many parts of the nation, it can certainly be more cost effective to have a monthly mortgage vs rent each month. Rent prices have escalated and have no barriers. They can be increased with little to no notice. Fixed rate mortgage payments don’t change and offer increasing equity in the property which can be borrowed against if the need arises.
4) Advantages vs Disadvantages?
Certainly, there are many advantages to owning your own space, besides the investment of equity it provides. Ownership gives the freedom to renovate, pride of ownership, ability to secure and enhance outdoor spaces, all with rights to do as you wish (outside laws, HOA Covenants, and county restrictions). Renting may provide amenities, such as workout facilities, that doesn’t come with ownership; but limited floor plans, generally a lot of shared space, noisy neighbors with no recourse, limited parking, no investments, and little to no outdoor areas.
DECIDING TO BUY
So, you’ve made it this far and decided buying is for you! Let’s consider a few things you want to think about:
- What can you afford?
- What size home and/or yard to you want to purchase?
- Where do you want to live?
- How much do you know about the process?