Buying vs. Renting: How to Decide What’s Right for You
Homeownership may be the “American dream,” but that doesn’t mean it’s always the right decision for everyone. Depending on your stage in life, it can be complicated to decide if you should continue to rent or make the jump to homeownership. Your finances, lifestyle, and future plans are among the many factors to consider before deciding what makes sense for you. Here’s what to consider...
Top Reasons to Rent
1. You’re unsure about your location or career
If you’ve recently moved to new to a city, expect to make a job change soon, or don’t see yourself staying in the same place for the next few years, it may make more sense to rent until circumstances feel more stable. 2. You are not in a financial position to purchase
Can you afford to purchase right now? If you’re considering buying, here’s what you’ll want to have savings for;
3-20% of the purchase price for a downpayment
3% of the purchase price for closing costs
budget based on consistent income that will be under ⅓ of your take-home pay
Speaking with a great local mortgage lender can help you clarify these numbers and where you stand. If you find your finances are not quite there yet, renting until your savings better support buying may be your best move. 3. You don’t want the responsibility of maintenance
Renting is a good option if you’re not interested in maintaining a home. While there are lower maintenance homeownership options like condos and townhomes, ownership can still be a lot of work and require investments of both time and money.
Top Reasons to Buy
1. Financial stability & growth
Unless there are more compelling reasons for you to rent, paying the same amount to build home equity rather than paying a landlord is, for most people, a no-brainer. Additionally, unlike rents, a mortgage provides a fixed cost that won’t rise over time as well as tax deduction benefits.
2. Building Wealth Through Home Equity
A homeowner’s equity builds over time as the home appreciates in value and the mortgage is paid down. This equity not only builds your wealth but also provides leverage for you to achieve your goals. A line of credit can be secured with a home equity loan, the equity you built up comes back to you when you sell your home down the road or can set yourself up for retirement with a major asset and low housing costs.
3. Privacy and Freedom to Personalize Your Space
In a sense, your living space is an extension of yourself. Studies in environmental psychology have shown that your living space greatly impacts your overall well-being. Owning a house means you can personalize it to make it a home and create a space that’s truly yours.
Figuring out whether to buy or rent is a personal decision that should be informed by your financial situation, lifestyle, career ambitions, and long-term goals. If you decide you’re in the right place to jump into homeownership, I’m here to help you through the process to achieve your goals!