Many people want to know if renting or buying a home is right for them and their finances. There are pros and cons to renting and buying a home. To find out if you should continue to rent or if you’re prepared to own, check out the rest of this blog.
Pros Of Renting
Possible Cost Savings For Renting
When comparing the upfront costs of renting or owning, renting comes out much cheaper in the short-term. In the short term, renting can be more affordable because of the down payment and closing costs included in purchasing a home. Renting is a decent option for someone who needs a place to live but doesn’t have cash saved up for more than a rental deposit. Homeownership also comes with extra costs that renters don’t have to worry about, such as property taxes, maintenance, and repairs.
More Flexibility While
Renting provides more flexibility than buying for people who don’t anticipate staying in one place for very long. Being a renter allows you to make last-minute lifestyle changes, and it is much simpler to pick up and move once your lease is up rather than going through the process of selling and purchasing a new home.
More Cash Flow
Lastly, you will have more cash flow when renting. The majority of homeowners put most of their savings towards their new homes. In this case, a lot of your money is tethered to your investment, making it challenging to get to quickly.
Pros of Buying
Rent Is On The Rise
According to Zillow, the median rental asking price for the US is $1,594 per month. In comparison, a median-priced home of $248,857 would offer a monthly payment of $1,125 based on 5% down and the current 30-year fixed rate (note: this example excludes taxes and insurance costs). Given this data, even when considering the maintenance, taxes, and closing costs associated with homeownership, buying seems cheaper and more affordable.
Over the past eight years, cities have seen rent prices consistently rise. However, when purchasing a home, you can lock in a monthly cost, so it stays the same for your loan term.
Buying An Investment
Renting may be less expensive in your area, but the truth is, you are paying for someone else’s investment each month. If you buy your own home, you’re building equity in your property and increasing your wealth. Every mortgage payment on your own home raises your asset’s value.
Homeowner Tax Benefits
When you own a home, there are certain tax benefits. You are allowed to deduct several property-related expenses. In some cases, even the interest on your mortgage can be deductible.
Which Is Better – Renting Or Buying?
If you have some savings and plan to stay in the same place for a few years, buying is a wiser choice for the long term. With rent on the rise, your future self will thank you for choosing to invest in your home purchase. If you would like to discuss whether renting or buying is the right fit for you, our Client Advisors are available 7 days a week and can help you find out what you can qualify for over the phone at (855) 855-4491 or by email at jvmteam@jvmlending.com.
