To Rent, or To Buy?
In many areas today across the United States, median rent continues to rise according to the data provided by US Census. However today’s mortgage rates and refinance rates are at historical lows. So it creates the question in many people’s mind; to rent or buy?
The best time to buy is more than just the question itself. The answer to this question is more individual than most people consider. Answers to the question of should I rent or buy is dependent on factors in your current situation and future goals. Below are some concepts to help you decide which is best for you; And help you determine if you are ready to own a home.
Rent May Increase, But It May not. Eventually- It Will
There’s a lot of reasons why someone would want to purchase a home, but most often the top motivating factor for many is the cost of renting. It’s never fun to watch your money leave your wallet and go into the pocket of someone else. And as history is proof, rent will always eventually increase. The US Census Bureau releases quartly reports which include homeownership and median rents are showing increases year to year pretty consistently. When you own a home, you will most likely be locking in your payment for the life of the loan which will help create a stable and consistently predictability in your payment or monthly expenses routine.
Customizable; Not Likely if you Rent
If you are renting, you have likely run into some rules that you aren’t particularly fond of. Such as, painting your walls or even mounting a TV or shelf. This is also a huge decision maker for a lot of renters who come to the other side of real estate- and purchase. Many landlords place restrictions on tenants who want to make cosmetic improvements or upgrades. Tiny renovations or just slapping paint on the walls are frequently dictated by absentee owners, and therefore limits the ability to customize your space. If you are finding yourself increasingly disastisfied with the restrictions of renting, you may find ownership the solution.
The Need For More Privacy
When renting your landlord always has access to your space in case of an emergency. Though rules apply- and your landlord technically can’t just walk into your home; the right of access still remains with limitations. If you own your own home, you are the one who decides who and when someone comes inside. This may not be a big deal for renters previously; However, In times of illness or Pandemic the need for privacy could become an increasing priority for some.
Possibility To Relocate
If you are like many millions of people, and have a job which may have an upcoming transfer or relocation, it could be time to consider renting vs home ownership. When you are a home owner and your job is requiring relocation flexibility you will likely find yourself in a position to sell your home one day. And depending on the market at the time you list your house for sell- it could take a while to sell unless you are willing to take a financial hit. Today however with the housing market’s low inventory we see that this isn’t the case presently. Homes are selling at a record pace and often with buyers competing against one another. So even home ownership is a little more flexible than you may be thinking at the moment. It’s still important to consider that renting will always be more flexible in terms of relocation convenience.
Every time you pay your rent your landlord is earning equity that his/her property is gaining. If you are the owner of your own house, the investment benefits will be yours an therefore count towards your overall net worth. You can one day use the equity for home renovations, sending a child to college, starting up your own business, or savings for retirement.
Renters don’t usually get tax breaks for renting property, but if you own your home, there are some tax advantages you can use that may be beneficial to you. For example, you may not know but you can actually deduct things like your property taxes, or mortgage interest. But always consult your tax professional or accountant to see what deductions apply to your situation. When you rent- you guessed it, the landlord gets the tax breaks.
The good news as a renter, and a valuable benefit to some who aren’t quite ready for homeownership is- that renting doesn’t put you on the hook for a new a/c whenever it breaks. Usually that is something the home owner pays for- AKA your landlord. And if a roof needs replacing that also is usually your responsibility as a tenant. Which may be a positive factor for someone who may not be able to financially or otherwise plan for situations like that. (Disclaimer- this is general common situations; All repairs etc- are determind by contract between tenant and owner, check your lease and be aware of what repair liabilities you are responsible for)