You’re a renter, and maybe you have been for years. Recently, you’ve noticed that your friends are all saving for a down payment or just purchasing their first home. You wouldn’t mind getting out of your apartment, having more space, a lawn, garage. Here’s the catch: you’re not sure if renting or buying a home is right for you. Are you ready to become a homeowner? Or does renting make more sense? Let’s go through the comparison of both to find out which is right for you.
Know Which Questions to Ask
Renting versus buying isn’t as straightforward as you might think. There are many factors to consider. Answering these few questions can help lead you in the right direction.
How much can you afford?
Make a budget to decide how much you can afford to pay every month. Once you’ve answered this question, talk to a lender to get pre-qualified. Now you know the price range of houses you can look at and what you can expect to pay monthly on your mortgage. At the same time, research rental costs in your area.
How long do you plan to stay in your next home?
Are you looking for a place to stay for the next 15 years, or have you made peace with moving again in another two or three? Most people buy and sell their homes based on life events. Typically, your first home is smaller and less expensive. Eventually you may have children and your next home is more expensive and larger. Then, you become empty nesters and your home needs changed yet again.
Do you want more flexibility or stability?
Rental life can be many things, but it’s not especially stable. Rental costs can go up yearly, and as long you’re depending on a landlord, your fate is in the hands of another person. Should your landlord decide to sell your rental house, your entire life could change quickly. Buying a home with the right loan will enable you to lock in a mortgage and be the master of your own destiny.
Do you have enough money for a down payment?
Down payments can range in cost from 3.5% to 20% of the cost of the home. If you are willing to look in the county you may be able to qualify for a 0% down payment with an USDA loan. If you have money saved, now may be the time to buy.
Are you out of debt?
Large payments can make qualifying for a loan more challenging. If your payments are small or non-existent, you’ll be able to qualify for a more expensive home. It is about the percentage of income over debt.
Advantages and Disadvantages of Both
Did you know? According to a Pew Research Center analysis of U.S. Census Bureau data released in 2016, a higher percentage of U.S. households are renting now than at any point in 1965.
Advantages of renting a home:
- No commitment
- Less maintenance
Disadvantages of renting a home:
- No equity is accumulated
- You’re dependent on your landlord to make repairs
- You may not personalize or change the space
Advantages of buying a home:
- You can paint or change the space in any way you want
- Mortgage rate locked in (if you have a loan with a non-variable rate)
- You can accumulate equity in your home over time
Disadvantages of buying a home:
- You’re responsible for your maintenance
- Relocating is more difficult
Is It Better to Rent or Buy?
Your lifestyle, goals and future must be taken into consideration when you’re trying to decide whether to rent or buy. Think of your future goals. Will you be growing your family? Changing jobs? Do you have a spouse? Will you be inviting an older family member to come live with you soon? Are you ready to pay a home loan? Home buyers must ask themselves all these questions before deciding whether they’re ready to purchase a house.
Ready to Look Into Home Loans or Mortgages? Contact a Reputable Lender In Your Area
Now that you’ve read through this blog, hopefully you have a better understanding of the advantages and disadvantages of both owning or renting a home. Once you’ve evaluated your finances and other life factors, you should be able to make a more informed decision on which is right for you. Contact us at Mid America Mortgage Services, Inc. to schedule a meeting to dive deeper into home loans and mortgages!
