Are you looking for your first new home? Maybe your next move? No matter what, it’s an exciting time filled with a lot of uncertainty.
Whatever your particular situation, you’ll need to figure out if buying or renting a home is the best option for you right now. It’s definitely a debate worth giving plenty of thought before making a decision!
Don’t worry though, we know how big of a decision this is, so we want to help you. Having dealt with so many sellers and buyers throughout the past years, we understand the market and people’s situations very well.
Therefore, we have put together some important things to keep in mind and consider as you move along this road in your life.
Understand The Difference Between Buying and Renting
Before diving into the questions that will help shape your decision, let’s start off with the basics of buying and renting a home. By studying a few pros and cons, you can start formulating thoughts about both buying and renting a home.
To start off with pros to renting a home, you won’t be locked in, you will have less responsibility, and the research and effort at the beginning will be less.
By that we mean rental contracts aren’t as binding as buying a home because you can always leave once your lease is up. Also, you won’t be responsible for all the repairs needing to be done on the home. Lastly, you won’t have to study the market as much because you won’t have to worry about the value of the home!
As for the cons to renting a home, you won’t have guaranteed stability, you don’t have the opportunity to profit, and the home is never truly yours.
Houses increase or decrease in value often, so landlords have the power to increase rent on you or not allow you to extend your lease, causing you to have to move often. Monthly rent you are paying does not help you grow equity so although you aren’t wasting money, you’re not necessarily investing it either. Lastly, you can’t always make the changes and adjustments to the home you are living in when you rent, which can make the home not feel truly yours.
Some pros to buying a home are the potential to build equity, more stability, and freedom.
The house you buy will hopefully increase in value, allowing you to sell it and make a profit over the time you spend living in it. The property is completely yours so you won’t have to worry about moving suddenly and can make any changes or improvements on your own time.
As for the cons of buying a home, there are more expenses, you will take on more responsibility, and you could lose money.
Not only will you have to have more money upfront and possibly have to take out loans, but once you own the house there are many expenses besides the mortgage payments as well.
With owning also comes a lot of responsibility as all the repairs and upgrades needed to be done will have to be done through you, whether you do them yourself or hire someone. There is also no promise that your house will increase in value. You could possibly lose money in the end if your house loses value.
Now that we’ve gotten a general gist of the differences between buying and renting a home, let’s look at some of the tougher things to consider to help narrow down your decision.
What Type of Payments Can You Afford?
When renting, your expenses are almost always predictable. However with buying a home, expenses are up in the air more often than not. Figuring out your income and what you can afford will help give you an idea which is best for you financially.
When renting, you are usually required to pay a security deposit up front, which would be the first month’s rent and then the last month’s rent as well. Your lease could have utilities included or you might have to pay those separately.
With buying, you need a substantial amount of money to pay upfront for the down payment. The monthly mortgage payment you incur is only one of few financial burdens you will have to worry about. Some other expenses that might arise are property taxes, repairs, pest control, and different types of insurance.
As you can see, the types of financial responsibility differ vastly between renting and buying a home and that is why the type of payments you can afford should be a big consideration in this decision.
What Lifestyle Do You Want?
Choosing whether to buy or rent a home should be consistent with the lifestyle everyone in the home wants to live.
If you want flexibility, don’t want to settle down just yet, and are not sure what the future holds, you might want to hold off on buying a home too soon.
By buying a home, you won’t have the option to move around as easily, leaving a small room for flexibility. Buying a home is a lot more binding because you can’t just decide to sell your house one day, you have to study the market and make a decision based on that, not your own personal choices.
In addition, if you don’t know what the future holds for you professionally or personally, you might want to figure this out before buying a home. If not, you might be forced into living in a way you don’t necessarily want long-term.
However, if you are secure in your future, your career, financially, what you want for your lifestyle, and are ready to settle down, buying a home might be a great idea for you because it offers stability and the opportunity to make the home completely yours.
Know The Market
The last main point we would like to offer that you take into consideration is the market itself.
Knowing the market is a way that could help you make this decision in a short period of time.
Simply put, if demand for homes is extremely high and supply is low, you might want to hold off on buying a home because prices will be sky high. You can rent instead in the interim.
Remember that not all leases are long term. If you are really looking to buy but the market isn’t promising, you can rent until it is best to buy. Renting gives you that flexibility.
On the contrary, if demand is low and supply is high in an area that should give a good return within a few years, that might be a really good investment for you while also being exactly what you’re looking for in your future home.
At the end of the day, if you are reading this blog, you are probably on the fence about renting or buying a home. Therefore, it never hurts to give it a little more consideration before making a decision.
We strongly recommend looking over the points in this blog again and giving them the proper time and consideration so you can make the decision that is truly best for you.
If you’re looking to sell a home fast so you can get into your new one quickly, CLT Buyers can help you out. We offer completely cash offers and take no commissions.
That means you get the quickest and easiest outcome and can get into your new home in no time. If you’re interested in learning more, send us an email and we’d be happy to talk about your goals!