Are you wondering whether you’re ready to buy a home or if you should continue renting? It’s fair to feel stressed about the decision in the best economy, let alone one where the price of homes, home renovations, and mortgage rates have increased over recent years.
When deciding if you’re ready to shop for a home there are many things to consider. However, it may help to compare the pros and cons of home ownership versus renting in just two categories: your lifestyle and your finances.
In general, if you see yourself staying in one location permanently for several years, owning a home might make more financial sense. The number of years to “break even” when comparing buying to renting will depend on several factors. These could include the property’s location, fluctuation in property values, or even the reason you might eventually move and sell a house. For example, might you sell because you’re moving for a new job that pays significantly more? That pay increase might be enough to justify selling a house sooner than later.
If you don’t see yourself settling down anywhere anytime soon, a rental and lease agreement can be much more forgiving on your finances— it allows you to pack up and go when your lease ends. On the flip side, a landlord may choose to sell their property, forcing you to move when you aren’t ready.
When you want the freedom to paint your walls, plant a garden, or have a dog, homeownership allows that. With a rental, the value of any money and time you put into improving it isn’t yours to keep – it’s your landlord’s. When you make improvements to a property you own, it can increase the value and therefore the equity of your home (it’s like your home is worth even more than the loan you used to buy it, which means more cash for you if you do sell). When your landlord doesn’t outright ban pets in your rental agreement, they likely will charge extra each month for every pet you have. If it’s your house, it’s your rules. You can choose to live with 4 dogs, a cat, and 2 birds if that’s what makes you happy.
So, if independence in the decisions regarding the place you call home is important to you, and you see yourself sticking around for a while, home ownership might be something to consider.
Although rent may increase each year, it’s a fairly predictable expense. If the roof needs to be replaced or the dishwasher fails, it’s the landlord’s responsibility to fix them. Likewise, the landlord will (in most cases) take care of any upkeep, like mowing the lawn or snow removal. That can free up your time and finances if you don’t already own a lawn mower, snowblower, or truck with a plow.
When you own a home, you can get a fixed-rate mortgage, so you know your expected loan payment month after month, year after year. However, that payment only buys you the space to live in. There are many other expenses to owning a home like the above-mentioned repairs and upkeep as well as utilities, taxes, and insurance. If you can save for a down payment, easily make mortgage payments, pay utility bills, and still save some on the side for unexpected bills, then you might be ready for the financial responsibility of homeownership.
Of course, the decision to buy a home or continue renting isn’t something that can be made after reading one blog article. If after taking the above considerations into account you are excited about the possibility of home ownership, contact us at 1.800.272.0159 and we will connect you with an expert that can help you understand the finer details. We can help you take the next steps toward shopping for a home, and if you’re not ready now, we can help you understand how to prepare for the goal of home ownership in the future.