April 3, 2018
To Rent Or To Buy?
Ah, the age-old question prospective home buyers are haunted by: to rent or to buy? Buying (or not buying) a home is a big decision, and there is not an easy answer. While some believe buying a home is not a viable option, others believe renting a home is just a waste of money. For instance, a recent study completed by RENTCafe.com, determined that most millennials will pay $92,600 in total rent by the time they turn 30. That’s a big chunk of cash that could have been put toward a down payment or mortgage payment, which creates equity in your home.
However, both pros and cons for buying and renting exist. Ultimately, it boils down to a few factors and parameters that are unique to an individual’s lifestyle and financial situation. Here are a few things to consider:
- Your finances: Are you financially ready to buy a home? A home is not a liquid investment, and you can’t count on being able to sell a home for a profit, or even break even, in your first few years of ownership. Plus, the down payment and mortgage are not the only costs associated with owning a home. Don’t forget about the additional expense of utilities, insurance property taxes and potential Homeowner’s Association fees—and that’s before simple upkeep and repairs from routine wear and tear.
- Your neighborhood: What is the financial state and housing market like in the area you’re looking to live? Will a mortgage payment exceed rental costs in the area or vice versa? When you buy a home, you are also investing in the economy of the area in which you buy. Therefore, it’s important to consider whether the neighborhood is stable or appreciating in value.
- Your future plans: How long do you plan on staying? If you’re confident you’ll live in the area for at least 5 years, buying a home is something you should consider. If your future plans are up in the air, renting offers more flexibility to move around as needed and invest, save and/or spend elsewhere.
- The real estate market: What is the current state of the real estate and mortgage market? Is it hot or not? Do your research and contact a professional for advice on the best times and places to purchase a home or rent a home.
Using Method Mortgage’s Rent or Own Calculator is a quick-and-simple way to compare the true costs associated with renting or owning a home based on your length of stay and several other parameters. For more information or to discuss your specific situation, contact a Method Mortgage loan officer today!