Deciding if you want to rent your next home or buy can be a daunting task. It may feel like the logical next step, or you may just be sick of dealing with rent payments and moving every year.
Either way there are some important things to consider before you make your decision. There are pros and cons to both renting and buying. The best thing is to know what’s best for you, and what fits into your future.
Penny for your thoughts:
Timing and amount of payments are one thing to plan for before you rent or buy. Renting will always be the cycle of owing the landlord rent every month. When you buy, you can either purchase your home outright or pay a monthly mortgage. How much you pay for your mortgage each month will depend on your down payment and loan size. An additional aspect to consider is that rent is subject to change with the market. From year to year your rent could increase or decrease. When you have fixed-rate mortgage you don’t have to worry about the fluxes in the market.
Down payments are usually unavoidable when it comes to housing. One important thing to consider with buying is if you can afford to make a 10-20% down payment on your mortgage, that will put you in a great place. It is also important to consider what percent your mortgage is of your monthly net income. If it is under 25%, then you will still have enough room to budget for other expenses. With renting you may be asked to put down a security deposit as well as a few months' rent when signing a lease.
When renting there is not any potential to receive tax benefits. However, if you can itemize your taxes, you may be able to write off your mortgage interest payments. Buying a home also gives you the opportunity to build equity.
To buy or not to buy:
With owning your home, you have no landlord or leasing agency to answer to. This can give you autonomy in how you keep your house. You have the freedom to decide how to design your home. The style, decorations, and paint are all up to you! This may not be appealing to all, however. It may seem like less work to have someone else responsible for fixing things when they break. With the freedom of owning your home there is also the responsibility to keep up on maintenance.
It can sometimes be difficult to find what you are looking for in both the renting or buying market. You are limited depending on what is available. You may be settling on certain aspects but the nice thing about owning a property means you can make changes to it to fit your wants and needs. If you are willing to do some updates on your home and improve it while you live there you could end up breaking even or selling it for a profit down the line.
If you know that you want to be in an area for an extended amount of time it may be cheaper for you in the long term to buy a home. Similarly, if you travel a lot for work or see yourself somewhere else in five years it may not make sense for you to purchase a home at this time.
Having a sense of what you want and a plan for your future are good things to think about before you start the home buying process. Finding a real estate agent who understands you and is willing to work with you to find something that fits your needs is incredibly important. If buying a home is right for you, contact Jessica and Sarah today to find your perfect home!