Renting Vs. Buying

There are many things to take into consideration when deciding whether to rent or buy. Most real estate and financial experts widely agree that if you are  going to be in the same home for a minimum of five years, the economics of purchasing outweigh any benefits of renting. Becoming a homeowner has always been the American dream, but with tight bank regulations and higher than normal unemployment, the dream of owning a home is more complicated now than ever. After the collapse of the housing market led to a record number of foreclosures and a difficult economy, potential homeowners are wary. Purchasing a home may not necessarily be in your best interest financially. Resting has become a popular choice among “would-be homeowners”.  Whether buying or renting is a better decision for you depends on many factors.

Financial

The decision to buy or rent is based largely on financial capabilities or limitations.  A homeowner must pay a down payment, closing costs, mortgage payment, property taxes, closing cost and take care of utility payments, renovations, and maintenance.This requires a lot of up front capital that many people don’t have it today’s economy. Buying a home can save you a lot of money in the long-term when compared to renting, but if you are unsure that you can afford the initial home ownership costs or if you do not know whether your income will remain stable enough to finance a home, it would be more fiscally responsible to rent until you are more secure in your finances.

Practicality

One factor to take into consideration is how long do you plan on staying in the city where you are planning to live? Owning a home is much more permanent than signing a short-term lease. If you feel confident that your profession won’t require you to relocate or if there are plenty of jobs in the area, home ownership may be a viable option. However, if the job market in your area is stagnant, chances are the value of homes in that area may be as well. Another consideration is do you want to permanently stay in that area, or would you rather be free to move? If you aren’t sold on where you’re living, renting offers you a lot more flexibility.

Sales Trends

When considering whether to buy or rent, make sure to check the sales price trends of homes in the area you are interested in. If the area seems to be declining in value, you may be better off renting. On the real estate sales front, now that the economy is improving, local economists are predicting a  strong and steady rise in home and condominium prices. But with the steady increase in mortgage interest rates and the rise in real estate property values, your dollar goes less today than it did one year ago.

Independence

Landlords and property management companies often handle maintenance, renovations, property taxes, and some utilities, which takes the burden off of renters. A good property management company can save renters time, money, energy, and stress. You can call someone to handle plumbing issues such as fix the dishwasher or get a raccoon out of the air vent if you’re renting, but you must deal with that yourself if you own your home. However, renters also have little freedom to adapt the home to their needs. Landlords and property managers vary in quality, so while one landlord may let you paint your walls in any color you choose, the next landlord may not even allow a single nail in the wall. Renting allows more freedom, fewer responsibilities, and fewer initial costs. There are pros and cons to both renting and buying, so it is important to determine what your resources allow. Homes provide stability, security and independence. For others, renting is a more viable option. Crunching the numbers and evaluating what your needs are will help you make an informed decision.