Should I rent? Should I buy? That is the question that can only be answered depending on your personal situation. A growing number of buyers are asking themselves this over and over again, due to the ever-changing real estate market. Many buyers are still feeling the sting of watching homes go down in value the past several years.
There was a time when the majority of renters were college students and young married couples saving money for a home down payment. But today, renters cover all ages and economic types. Many are waiting until the job market improves or the housing industry is on more solid footing. And while things are picking up, it is still a confusing time in the housing market.
If you are considering whether to rent or buy, here are some pros and cons to consider.
Pros and Cons of Renting
You pay the rent, landlords take care of the property.
More single-family homes are available for rent than ever before, as homes are not selling quickly enough for many homeowners.
You can negotiate better deals if vacancy rates are high. Some landlords may offer free cable, free parking or a lower deposit if a rental has been sitting on the market for too long.
The initial investment to rent a home or apartment is much lower than buying a home. You usually need 5 to 10 times to move into a home than to rent an apartment.
Renter may be able to budget easier. Because rent is an amount that is fixed every month, it’s easier to set aside. But with homes, there are often sudden repairs and other issues that can wreak havoc on a budget.
A renter has more mobility and flexibility to move since leases ten to be short-term.
There are often many rules that are enforced.
Landlords may not allow pets
You usually are not allowed to decorate, paint or make any changes.
Now here are some pros and cons for buying a home:
It should be considered a long-term investment. While real estate moves in cycles, over the years, it has consistently appreciated.
Mortgage reduction builds equity: Each month you make your house payment, your principal balance is reduced. One day, if you stay in your home long enough, you many own your house outright and have a significant amount of money when you decide to sell.
The buyer has control of the property.
If you plan to stay in a place for a long time, buying may be the right route for you.
A buyer will need a hefty down payment. This is usually the most daunting expense for buying a house. A down payment can cost up to 20% of the property price.
Expenses owning a home can be high. Buyers often fail to count the cost of what it takes to maintain and own a home. From landscaping, taxes, insurance, repairs and other costs need to be considered.
Let’s face it. We all need to live somewhere. But the reality in today’s world is that the consumer needs to be fairly knowledgeable not only in terms of their own finances, but what their long-term plans are. If you are on the fence about purchasing a new home, think about these few things:
Job Stability: Do you like your current job? How long have you been there? Is your position stable? Will you have annual raises and bonuses? Certainly, no one can ever by 100 percent about their job security, but take an honest look at your workplace’s climate. If there have been rounds of layoffs, and the rumor mill says more are coming, you may want to hold off on buying a home.
Expense: Again, buying a home is not just about making the mortgage payment, it’s about maintaining the lawn, fixing things when they break and keeping the place looking nice. Are you ready for time and expense involved when maintaining a home?
Rent v. own: If you are renting a home or apartment, look at how much rentals are going for in the area in which you’re thinking about buying and compare prices. Compare average rent prices in the area with your total monthly payment, including taxes and insurance. If owning a house costs 35 percent more than renting, you might want to reconsider.
Credit Score: If your credit score is not ideal, then it may be more difficult to get a loan and it may increase your interest rate. It might be worth looking for a rental, paying off debit and improve your credit score than purchasing a home.
Staying Put: Owning a home means that you plan on staying put for at least several years. If you are not certain that you plan to stay in one place for at least three years, it may be a better idea to rent until you are certain of your plans.
The overall goal that anyone should consider is that there are good times and bad times to buy a Windsor home. While the market is slowly improving, it’s important to look at your financial situation before you make such a long-term investment. The point of owning a home is to enjoy it. But if it becomes more of a stress and worry and can zap you of any financial investment, then it’s always good to step back and reconsider.