You’ve probably had this debate in your own mind many times: should I rent, or should I buy? For the most part, each option is based on a person’s individual situation. But hearing the reasons for why each could benefit you (or not) may help steer you in the right direction.
How long do you plan to stay?
This is a very important question.
Purchasing a home comes with costs and fees, and the longer you plan to stay in a home, the easier it is to spread out these costs. Additionally, the shorter you stay, the less likely the chance of your home appreciating to balance these costs is. If you’re only looking to be in a place for a year, investing in a home and beginning to make roots may not be your first priority. But considering your long-term goals and where you’d like to settle in for some time has many more benefits than trying to find affordable rent in wherever you live.
Are you throwing away your money?
The biggest difference between renting and buying is equity.
When you’re working on paying off a home, you’re building equity for yourself. The more your debt decreases, and your property value increases, the more equity you have. You can increase your property value with home upkeep, improvements, and rising market prices. When buying a home, you are definitely likely to make a few improvements to it, from new bathrooms to new kitchen countertops, even flooring! All of those things contribute to your equity.
When paying rent, you’re without a lot of the expenses that come with your own home… insurance, taxes, and repairs. But what if your landlord doesn’t show up for those repairs? What if you’re without a shower for a week? What if you don’t invest in renter’s insurance, and something happens to your possessions and furniture? You may often hear “you’re paying someone else’s mortgage with your rent!” and it does make sense… your money is going in someone else’s pocket.
Do you have enough time to take care of a home?
If your answer is yes, think about this… your home can be whatever you want it to be. If you want a huge mural in your living room and a cool, palm-printed wallpaper in your bathroom, you can do it! If you want a front and back porch, you can have both! If you kind of hate tile in your kitchen, you can replace it with hardwood! No landlords are around to tell you they can’t afford these changes… it’s all YOUR call. How cool is that?
A benefit of renting is that whatever repairs, maintenance, appliances, and updates are needed for the property, your landlord is responsible for paying them. So if you’re incredibly busy to the point of not having enough time to handle these things, or if you would essentially use your space just to sleep at the end of the day and make some mac n cheese, then maybe you don’t have the time right now.
What about the amenities?
Fitness centers, meeting rooms, storage areas, rooftop decks and in-ground pools.
Your own home may not have all of these things, though you can pay for the installation of an in-ground pool on your own, if you want. Maybe you’re going to make the extra bedroom into a home gym. Go for it!
If a condo building has these things, you will likely have to pay a bit extra to access them, too. If those first few amenities listed sound like things you need, your home may not have all that (not right away, at least).
Do you need a down payment?
On a home you are purchasing, yes, of course you do!
Ideally, you would want to be able to put down 20%. But if you’re not in the position to put so much money down, many renters looking to transition into buying put down 3-5% on their first home. This is definitely an affordable option, and you can begin building your equity sooner rather than later.
When renting, there is no big beginning cost (unless we’re talking about those pesky security deposits). Though finding a rent much lower than a mortgage is certainly a challenge, and you may find yourself wondering why your rent is so expensive and going towards no final goal, aside from paying for the next month.
But then you come back to the same question… is rent really less than paying a mortgage?
So, which one is the path for you?
It’s your call. We can’t tell you what to do via blog, but we can help you understand the benefits of each a little better. Whatever you choose, we hope you make any space your very own.