Buying vs. Renting

There are important decisions in life that we need to make through informed choices. A milestone such as this is the decision of buying vs. renting a family home. Remember that the aim is not merely living the American dream of buying a home that might bring you more loans than you could handle. It’s on finding which option suits you best at your current situation and based on your near future position.

Advantages and Disadvantages of Buying vs. Renting

Housing cost
Buying – it is a variable cost due to maintenance and upkeep which can, for the most part be never ending.
Renting – it is a fixed cost and you don’t spend big money on major renovations.

Down payment
Buying – requires greater down payment plus other fees.
Renting – low down payment; typically requires a security deposit, first and last month’s rent.

Buying – financial issues may arise when financial circumstances change; examples are foreclosures and short sales.
Renting – when circumstances in one’s life change, a renter is in a nimble position that won’t devastate their credit.

Transactional costs
Buying – typically 6% cost to sell it and move on.
Renting – None.

Things to Consider in Buying a Home

  • Is your income secure? Possible financial issues would hurt your credit status. So it’s important to acknowledge that you have a stable source of income for the span of your mortgage.
  • Typically, a bulk of what you pay in the first 5 years is simply interest. Thus, you need to assess if you plan on living in your new home for at least 5 years or so.
  • Make sure to have enough saved for the down payment and closing cost. You shouldn’t coast in on fumes into your new home and it’s important to have reserves when owning a home.

All of that being said, owning a home provides people with incredible gratification, grounding, pride and family stability. With where mortgage rates are today, it can be an incredible opportunity for you and your family.

However, choosing the right Realtor who can help you understand and make a financially sound purchase is also very important. There are so many realtors that are not focused on anyone’s needs but their own, so make sure that you make the right choice for this too. Owning a home is the biggest decision most people will ever make financially and it pays huge dividends to work with someone that is truly qualified to help you.

If you need assistance on either buying or renting, allow us to help you by leaving your details below.

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