It’s a topic that has been discussed numerous times and at the end of the day, it really comes down to what you are most comfortable with and what you can afford. However, we wanted to put our two cents in just so you have all the facts to make a great decision!
“Should I rent a home or buy one?”
There is not a simple answer to this question as many factors come into play. These are questions to think through in order to help you decide what’s best for you:
- What are the current interest rates?
- For a while now, interest rates have been the lowest in years and that factor alone makes buying a house very tempting! The hard part is that it’s hard to predict when they will go back up, or if they will even go lower, so there is definitely risk involved, but as of right now, interest rates are making it a buyer’s market!
- What range are rental prices?
- If rental prices are more per month than what it would be to own your own home (and you have money for a down payment), then buying might be the better option. A great mortgage calculator can help you run some numbers quickly and easily. You could even try this “rent vs. buy” calculator from the New York Times.
- How long do you plan to stay in the home?
- If you just want to try an area out or plan to stay in the home only a few years, renting might be a better option, unless you think you can make money off of the house by the time you sell…which leads us to our next question…
- Have houses in the area appreciated or depreciated?
- This is a big factor to consider and sites like Zillow and Realtor.com make it easy to see what the home last sold for and when it sold. We can also give you this information quickly. If the home you’re looking at is selling for the same price or even a lower price than it did when it was purchased by the seller 10 years ago for example, this signals a red flag and could be a contributing factor to a rental being the way to go in that particular area of town. Not to say that buying the home would be a bad decision, but the chances of making money off of it when you are ready to sell don’t look promising.
- Do you have enough money for a 20% down payment or will you have to pay PMI?
- While 20% can seem like a daunting number to pull from your bank account in order to buy a house, it’s worth every single penny! You absolutely can buy a house without 20% down, but you need to make sure you are comfortable with that financial decision. You can refer back to our recent blog post, What is PMI?, to learn more about what this is and can make the decision from there, but we strongly encourage a full 20% down payment if you are thinking of buying!
The bottom line is that there is no right answer, except the one that YOU make. It’s a combination of knowing your finances and doing what you feel comfortable with for the time being and the future. We are here to help you every step of the way, so give us a call today!