Many may argue that it doesn’t make economic sense to buy a home, but as a REALTOR®, I continue to see the pros and cons of homeownership and renting every day. I share my thoughts on each with you in the post.
When does it make economic sense to rent and when to buy?
Facts to know about renting:
• You are new in town and want to get familiar with an area
• Not sure where your career will take you next
• You don’t have a fixed income
• No credit history or a bad credit record
• You don’t want to have the problem and expense of maintenance
• Many utilities are included in your rental
• Rental increases over the years
• You cannot make any changes to the structure
Facts to know about buying:
• You build equity as you pay off your mortgage and eventually have full ownership of your home
• The equity built allows for you fund other major expenses
• Mortgage interest and property taxes are tax deductible
• You only pay capital gains tax for over $250,000 profit if you sell your home
• You can implement changes to make your home more livable and comfortable
• Maintenance can be performed as needed and you can even dabble in DIY if you are inclined
• Historically, appreciation has continued in the housing market at a steady rate
• Approximately 1% of the total purchase price will go towards the costs of purchasing a home and ~ 1% of its value will be spent on yearly maintenance
• There will be a yearly property tax and home insurance is essential
It is important to take your lifestyle and career into consideration.
The decision to purchase or rent is entirely up to you and you needs at any given point. If you are wondering which is the better option, then it’s best to compare the figures on a price-to-rent ratio tool. Use this tool the give me a call to discuss your specific housing situation, https://www.realtor.com/mortgage/tools/rent-or-buy-calculator.