Should you Buy or Rent your next Home?
If you’ve recently asked the question as to whether or not you should buy or rent your next home or condo…you’re not alone. With a tanking real estate market and a lending market which is the hardest its been to get a loan in decades (despite record low mortgage rates), it seems that everyone is faced with the question of whether or not renting vs. buying their next home. Millions of homeowners have had their homes foreclosed upon by banks and are unable to buy another home, but even those who have good credit to buy a home are cautious to enter the market, and for good reason.
Renting vs. Buying a Home
Homes are often the largest investment someone will make in their lifetime, and buying a home often comes with a 30 year long mortgage commitment, and don’t forget about having to pay for homeowners insurance, property taxes, and any repairs to the home. In the current real estate market most rentals will often cost less per month than a morgage because so many properties have hit their peak values. Prior to the real estate boom and bust it was almost a no brainer; if you could afford a home and get approved for the home it was historically a great investment. In today’s mortgage market, it’s next to impossible to get a home loan without some form of down payment or with VA Home Loan Eligibility from prior military service.
The Pros & Cons of Renting or Buying a Home
A lot of potential borrowers ask the question: Should I Buy or Rent my next Home? Below are some of the advantages and disadvantages of both buying or renting your next home, townhome, or condo.
Benefits of Buying vs. Renting
Buying a Home Renting a Home
Purchase costs – down payment + Closing costs + Fees.
Yearly costs – mortgage payments, condo fees, renovations, maintenance, property taxes, and homeowner’s insurance.
Lost opportunity costs – initial purchase costs of buying a home.
Selling costs – closing costs when selling a home.
Initial costs – security deposit
Annual costs – monthly rent and renter’s insurance.
Lost opportunity costs – calculated annualy.
Lease termination - possible loss of rental security deposit.
Deciding to Buy or Rent a House?