- Rent or Buy a home? What is the right choice? (Part 1 of 4)
- Rent or Buy a home? Weighing your commitment. (Part 2 of 4)
- Rent or Buy a home? Analyzing your fears. (Part 3 of 4)
- Rent or Buy a home? What’s holding you back (Part 4 of 4)
It’s a common misconception that rent is “dead money,” and not owning a home is equivalent to throwing money away. However, this comparison is not entirely accurate. In reality, whether you are paying a mortgage or have already paid in full for a house, there will be some “dead money” link to it. The age-old dilemma of whether to buy or rent has been put to every generation. The answer is neither simple nor straightforward. Renting vs. buying therefore, is a much more challenging financial decision than simply just deciding its time to purchase.
Is buying a greater commitment than renting?
Choosing to buy vs renting a home is one of the most important financial decisions you will ever make. To decide which option is best for you, you must compare the costs of renting with the commitment of purchasing. Renters commonly assert that home ownership requires “a tremendous financial commitment.” Of course, there is a financial commitment, but so is renting! A signed lease represents to the renter an agreement to pay a certain sum each month until the conclusion of the contract term. Sure the rental cost may seem lower than the average cost of mortgage, taking into account insurance and taxes. But, are you aware that there are tax benefits to homeownership; real estate taxes are still fully deductible. If you take this saving into account your mortgage may be lower than your rental cost.
According to many renters, the short lease durations are an advantage of renting. However, if you own a home and no longer wish to live in it or you find that it is too costly to maintain, you always have the option of selling. Despite the significance of the financial advantages and disadvantages of each option, deciding whether to rent or buy is a personal decision.
Is the cost of upkeep and repairs keeping you from buying?
Over time, homes require maintenance; when you rent, the landlord is often responsible for such costs. People who rent have less maintenance duties and more freedom to relocate if they so choose. However, buying a house might be a wise investment, as it provides you with the opportunity to establish roots, grow a sense of belonging, and develop a sense of community. Yes, owning a property entails taking responsibility for all accompanying obligations, such as upkeep and repairs. One advantage, of a well maintain property is an increase in value. Therefore homeowners, can gain from the equity that accumulates over time.
Should you tie your money up in a house?
Is investing in equity the best use of your resources? Or perhaps you could be using your limited resources in a more effective way? Some people prefer to rent because they don’t want to put all of their money into one asset. They prefer to invest their money in ways that have the potential to produce larger returns, for example stocks. Understanding how the present economic environment can impact your ability to borrow money and the possible costs associated with any kind of financing is essential. Did you know that there is potential for increase in property value during times of rising inflation. It is during such time that real estate typically performs well. As a result, homeowners can opt to sell their properties for more than they paid.
Everyone needs a place to call home, so while some maybe comparing stocks to home equity, it comes down to asking yourself the following two questions. Is investing my money in a house beneficial to me in the long run? Or should I continue paying rent while looking for the right investment opportunities?
Seek Mortgage Advice
There are circumstances that permit lower down payments for first-time homebuyers. You might be surprised to find that a 20% down payment is not always required. It is advised that you speak to a mortgage professional about the specifics of the home-buying process. This will give you a better understanding of what is required to purchase a home and you will be able to better budget your funds. You may even have a little extra for an alternative investment.
Where to find homes for sale or rent?
There are many real estate websites to find properties for sale and rent. The Leighton Team has been number one in sales on Cape Code since 2020. The real estate portal lists the featured properties on Cape Cod.