It’s a calculation everyone who has ever seriously considered buying a home has to make: Is it better to rent or buy? There’s a lot to think about. Deciding whether you’re ready to be a homeowner or prefer to continue renting means weighing a few different factors. Some of them are tangible. Others are harder to define but have a definite impact on your life. In the end, you’re the one who will have the final say about the issues that matter most.
Is It Better to Rent or Buy?
Both renting and buying have their perks. When you ask is it better to rent or buy a home, you’re ultimately asking which set of perks you prefer.
The Pros and Cons of Renting
Renting has its advantages. It can be cheaper than mortgage payments in some situations, and there are no down payment, taxes, or maintenance costs on a rental property. Renters also enjoy greater flexibility and mobility, and they have far less responsibility. However, renting does have its disadvantages. Rents tend to keep rising, so renters have less stability and control over their housing situation. They also miss out on tax benefits, and, unlike homeowners with a mortgage, they aren’t creating any wealth as they pay for their housing.
The Pros and Cons of Homeownership
Homeownership also has clear benefits. It’s an investment that provides not only stable housing but also a form of forced savings as you make your monthly mortgage payments and build equity. Owning a home allows you to be part of a community, provides a sense of pride and stability, and gives you the freedom to do more with your property. In some situations, a monthly mortgage payment can be lower than the rent for a comparable property, especially after you’ve occupied the property for a few years. Homeownership also gives you access to tax breaks. What potential disadvantages are there to homeownership? Homeowners are responsible for paying for things like property taxes, repairs, and maintenance. They also face the risk that their home might decrease in value. In addition, owning a property often makes relocating trickier.
Deciding to Rent or Buy
How do you decide whether it’s better for you to rent or buy? The first step is to consider your finances. You should only consider buying a home if your financial house is in order. You should have a stable and sufficient income, a solid credit score, and enough savings for a down payment. In addition, your other debts should be under control so that you can comfortably afford a home purchase. If your finances are in reasonable shape, and you’d like to see how the costs compare, PrimeLending’s Rent vs. Buy Calculator is a handy resource.
Lifestyle is also a major consideration. As Investopedia explains, homeownership involves a lot of responsibility, so it can be a major commitment of both time and money. Whether you’re currently spending long hours at the office, want to have lazy weekends, or are busy traveling, if you aren’t willing to put down roots and devote a sizeable chunk of your resources to a home, then homeownership might not be for you. Plus, both buying and selling a home have costs, so unless you’re sure that you’re ready to stay put for at least five years, it’s probably not wise to buy a home.
Sorting the Renters from the Buyers
Neither renting nor buying is inherently better, but one might be better for you. It might be better to rent if you think you’ll want to move for work, school, or pleasure; if your finances aren’t quite ready for homeownership; or if you prefer the flexibility that renting brings. On the other hand, you may be ready to start shopping for your dream home if your credit and finances are in good shape, you’re ready to settle down for at least five years, and you feel ready for the responsibility and control that goes with owning and maintaining your own home.
Have you decided that the time is right to buy a home? Whether it’s your first home or your next home, count on the home loan experts at PrimeLending Denver to help you find the right home loan product for your needs. Contact us today to learn more about our services.