Within recent memory, easily within the last five years, it was usually a far greater advantage to buy versus rent a property. When you bought, you were paying less per month for more square footage, as well as giving yourself more advantages and long-term investment opportunities. However, with interest rates and property values skyrocketing, buying is no longer the more economical option.
If you want to buy a home, it’s going to cost you probably $3,000 a month right now. That’s if you meet all the requirements and can cover the costs. If you want to rent an apartment, you will pay $2,000 or less for most places, meaning that you are going to save big each month as well as be free of several other responsibilities to the property. Yes, there are advantages to both, but you have to know what advantages are most important to you.
Why You Should Buy
Do you have a great credit score, established income and no debt? What about a downpayment, can you cover that? If so, then you may want to consider buying, even in a market like this. It is unlikely that you will lose any real value in the property in the near future as prices drop. However, your monthly costs will still be similar to those of renting a property of the same size.
Yes, you lose some of the advantages on the financial side, but you are paying the same to get more advantages from the property and you still have the option to refinance down the road. As you review the options available, also consider that right now, inventory is going up because homes are not being purchased. If you wait for the right time, it will be the right time for everyone else as well and you will have more competition.
Why You Should Rent
If your credit score isn’t strong, you cannot save enough for 20% down on the property, need to get your debt paid off or increase your income, then renting is the right move for right now. Always remember, you can buy down the road, but right now you should not buy if you are able to make your cost of living more reasonable by renting. While you may be paying as much for the property, you may not be covering costs like taxes and insurance, lawn care, pest control and more.
As a renter, you have several advantages that buyers do not and you also have the option to walk away from the property next year if you want to. That’s something to consider if you are not confident in the area you are living and may consider moving elsewhere.
Things To Think About
Before making a decision, you need to take a look at your finances, what options are available and more. Speaking with a realtor can help as well and they can point out things to consider like:
- Long-term commitment: Are you ready to make a long-term commitment to a property and that area? What do you know about this area? Why do you like this neighborhood? Is it the property or the neighborhood that you like the most?
- Money upfront: Are you ready to put that much money upfront to buy the place? Can you afford that? Buying with no money down may not even be an option but even if you can get a loan with little down, you are still covering higher monthly costs that includes a hefty interest payment.
- Financial responsibility: There are other responsibilities when it comes to the property including long-term care, maintenance and more. These are going to cost you time and especially money so you need to be prepared for that.
- Return on investment: Yes, owning a house means more money upfront and possibly paying more right now. It also means contributing more time and money into the property to make it more valuable and a better place to live. However, when you buy, you have the benefit of getting a return on that investment when you sell.
What will it cost you to get the house you want right now? Is it going to be cheaper for you to rent or buy that property? Can you afford both? If not, then you need to look at which options are more affordable for you and what you feel is right based on the current market and ways you can improve your situation. Those are all areas a realtor can work with you on.