To Rent or Not to Rent

Renting definitely has benefits that cannot be overlooked. You can usually walk away from a rental at little to no cost with a 30 days notice. Renting costs also appear to be less per month. And you may not have to deal with the cost of utilities breaking or mess with mowing the lawn and keeping up the flowerbeds.

However, renting has deficits. In the end, you will have nothing but receipts to show for the money you poured into renting. Rent payments also elevate with inflation, where mortgage payments are fixed. Your redecorating and renovating options are limited when you rent, and even if changes are made, the landlord is the one that benefits. Your fear of not being able to pay the mortgage bill equally applies to renting because a lack of money in either situation means no roof over your head. Either way you have to pay someone for a space to occupy. And even if you have the money to pay rent, your landlord may ask you to leave for any given reason; after all, he has the ability to kick you out.

Even the thought of purchasing your first home can be overwhelming for renters. But the old saying remains true, “When you’re renting, you’re just throwing your money away.” The largest part of your paycheck will either go toward your mortgage or to your landlord. Maybe the time has come for you to start investing your hard earned dollar into a home. Think about it this way, buying a home is like putting money into a savings account.

The three main factors that you need to take into consideration when deciding to buy or rent are monthly expenses, rate of the property’s appreciation, and length of term that you plan on staying in that home.

First, realistically choose an option that you could rent and an option that you could buy. Then, sit down and list the expenses you will have for renting. Do the same for buying so that you can compare them objectively.

Next, find the appreciation rate of your desired home to try and determine what the home’s value will be in the future. This will help you see how your money is truly being invested. Check Case Schiller for the tables that show changes of house prices in your region.

 And the last major factor that only you can determine is how long you plan on staying in that residence. Six months?  Six years? 40 years? The longer you desire to hold a home, the less appreciation you need in order to beat renting.

What are the Advantages of Buying a Home?

q       On average, home prices have gone up 7% over the last 30 years, making home buying a great investment.

q       Your mortgage interest and real estate taxes are tax-deductible.  So before the government takes taxes out of your paycheck, your house payment is subtracted, allowing them to only tax what remains. This saves you a lot of money.

q       Your mortgage payment is fixed, rather than following inflation like renting.

q       Interest rates are the lowest they have been in thirty years, making now the ideal time to invest.

q       You will be able to enjoy the sense of ownership.

q       You have the freedom to renovate and decorate as you wish.

q       Over time your mortgage balance decreases and equity builds.

q       You have stronger property rights, which gives you more privacy and control over who enters your home.  

Don’t Have Money for the Down Payment?

There are programs available for first-time homebuyers that meet all sorts of needs and offer incentives.  Some programs offer down payment or closing cost grants. Others give discounts on monthly house payments, which can save you thousands of dollars. There are also programs that offer money for the down payment at zero interest, allowing the homeowner to pay off the owed balance when they sell the house.

Why Buy A Home When You Can Rent?... click here