Q: I currently rent but wondered if buying a home would be worth the extra money?
A: Deanna Wolfe of Roohan Realty: Rent vs. Buy – most people face this question after living with parents, graduating from college dorms or after living in an apartment for a while. Buying a house isn’t for everyone, but it can be the most rewarding purchase you ever make. There are several things to consider before making the decision to buy.
First of all, do you have the money it takes to make the purchase? The down payment usually runs from 5-20% of the purchase price and there are other costs such as, monthly payments, insurance, taxes, repairs and upgrades to consider. On a month-to-month basis, you will probably spend more money to purchase a home than to rent.
For most renters, buying a house means moving into a smaller house or perhaps a less expensive area. Your lifestyle will change, too. A renter’s life can be quite extravagant; it may be hard to feel the same about the house you can afford to buy. You will have less money to invest or to spend on vacations or weekend trips. Instead you will have a house and grounds to maintain.
The major benefits of renting include:
- Flexibility - You can relocate easily
- Fixed costs for the lease term – No surprise bills
- No upkeep fees – Less property maintenance, such as drippy faucets, broken dishwashers, lawns, etc.
- Smaller upfront investment – You can invest your money elsewhere; such as the stock market.
The benefits of buying a house usually outweigh the disadvantages. The only one who benefits financially from a rent check is the landlord. Renters never see their monthly payments again and cannot use any of that as a tax deduction. Home buyers, on the other hand, spend part of their monthly payments buying an asset they can eventually sell. The remainder of their monthly outlay pays interest to their lender, which is fully tax deductible in most cases. So if you are renting you should consider how your housing payment could be put to better use by buying a home.
The major benefits of buying include:
- Tax breaks – You can deduct mortgage interest and property taxes
- Potential tax free capital gain
- Equity growth potential – Your homes’ value could grow
- Opportunity to build a respectable credit history.
In addition, homeowners experience many less tangible but very real benefits compared with renters – pride of ownership, a sense of stability and security, closer neighborhood friendships and more community involvement, to name a few.
As real estate professionals, we can supply you with the local market data and up-to-date information you’ll need to make a sound decision about renting versus buying. We can put you in touch professional mortgage lenders to determine how much home you can afford and the type of loan that would best meet your needs. We can also show you available properties that match your budget and preference.
Homeownership is already a wonderful dream come true for two thirds of American households – perhaps it’s time for you!
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