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:

1. 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.

2. 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.

3. 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.

4. 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!