Should you rent or should you buy? The rent vs buy debate has and always will be a topic of discussion for first time homebuyers when considering their next move.
As simple as the question may be, there are a ton of factors involved in answering that question. How long are you going to be in the home? Current market conditions? How much do you have saved for a downpayment? Etc..
Let’s talk a bit about the pros and cons of each.
Renting a Home
If you plan on moving within the next couple of years, renting may be a better option for you. You can move freely without penalty at the end of each lease. But on the other hand it could also mean you may have to suddenly move if your landlord decides to sell the house, or suddenly bumps the rent – it happens more often than you’d think.
The biggest argument you will hear while renting is that “you’re throwing away money” each and every month, or “stop paying your landlords mortgage”… First off, you’re going to have a monthly payment whether you rent or buy.
While it’s true you’re not building any equity with monthly rent payments, it’s important to note that with most mortgage programs you’re not building much equity in the first few years anyways.
Your rent payment is always a fixed cost. You’ll have rent and utilities every month, nothing more and nothing less. When you own a home you also have those fixed costs, but you’ll also be responsible for repairs such as servicing and replacing A/C components, replacing your roof, new pool pump, etc. You’ll never have to pay to replace your roof when renting.
One thing to keep in mind is that while your rent may be a fixed cost for the life of your current lease, rent will also always go up. Whereas your mortgage payment truly is a fixed payment(assuming you have a fixed rate).
Owning a Home
While owning a home does come with additional costs, there are countless benefits to becoming a homeowner from a lifestyle perspective and equity standpoint.
If you’re looking to plant some roots and start a family, or simply just want to experience the pride of homeownership, or have the flexibility to paint your rooms, or add landscaping to your property then becoming a homeowner has a ton of intangible benefits that renting simple cannot offer.
While you usually pay more interest upfront in the early years of your loan, the biggest benefit of owning a home is building future equity. As we mentioned in the renter section about, you’re going to have a payment for your house no matter what. If you pay rent for 10+ years that money is truly gone, if you pay a mortgage for 10+ years assuming the market hasn’t changed you could have hundreds of thousands of dollars in equity built up. Equity you can either access through a cash-out refinance, heloc, or cash through the sale of your home.
Speaking of market conditions, historically home values have always risen over time. Sure there has been highs and lows but the trend always moves upward. On top of the equity you’ve built over the years, an increase in home value will directly effect the equity you have in your home.
If you never refinance, you’ll eventually pay your house off. You can also take some simple steps to pay your house off up to 10 years earlier! At that point you can sell and get a large sum of cash, or enjoy your life with zero house payment!
So What Should You Do?
As you can see figuring out if you’re better off buying or renting comes down to a lot of “where am I at now?” and “where am I going?” type of questions that only you can answer.
But if you’re looking to start building a long term stable future, becoming a homeowner has more pros than cons.
Start by checking to see how much home you can afford with our mortgage calculator, then reach out to us to get pre-qualified.
Not Sure Where To Start?
That's okay. Let us build a custom loan program around your needs and budget.Contact Us