I’ve roughly defined the two types of home seekers below. If you find yourself clearly in one or the other category, that pretty much determines if you should look for a home to purchase or one to rent.
You’re a renter if:
• You’re new to this area and know very little about it: what are the different neighborhoods like, what commute options are available, where are the best schools, etc.
• You will be here for a short period of time, maybe not more than a year or a couple of years.
• You’d love to buy, but you do not have enough money for a downpayment and closing costs.
• Your income is not high enough—yet—to buy the home or starter home of your dreams.
• Your credit scores are not the best, and you want to build them up to be able to get a lower mortgage rate.
There are some cons to being a renter:
• Rent payments are not tax deductible, and you have no investment that will grow over time.
• You cannot modify or upgrade a rented home to really make it your own.
You’re a buyer if:
• You plan on living in this area for a long time.
• You’ve been here for a while and know pretty much where you want to live and what type of home suits your lifestyle.
• You have enough money saved or available for a downpayment and closing costs.
• You want a home that offers more privacy and space.
• You want a home that you can make your own—change the appliances, kitchen and bath cabinets and counters, flooring, etc.
• You want your investment and equity to grow.
• You like the idea of getting a tax deduction on your mortgage payments.
There are some cons to being a buyer:
• There is a responsibility and cost to being a homeowner.
• You may be at the mercy of changing market conditions.
The “no excuses” section:
• Do you think that home ownership is expensive, and you will not have the time, knowledge or money to care for a home that you buy? Then buy a condo or townhouse—they take as much effort to maintain as a rental, and you get all the benefits of ownership. And if you feel that you need to live in a larger home but without the maintenance responsibilities, think about what you’re throwing away each year renting a large house, buy one instead and hire contractors to care for the lawn and any repair issues that may pop up.
• There is a misconception that paying a mortgage is so much more expensive than paying rent. That may not necessarily be true, and you should look at the numbers carefully. Take this example:
An average 3-bedroom ranch in this area costs about $350,000, with tax in the $9,000 range. If you buy a home at that price and put down 15%, your monthly principal, interest, tax and insurance payment will be about $2,300, not much more than renting the same home. And don’t forget—you’ll be getting a portion of that back as a mortgage deduction.
Buying or renting is an individual decision, but it should be an informed one. From learning about different townships and developments to discussing market conditions, you can rely on me to give you friendly, professional and useful advice. Send me a message or give me a call to discuss your home search. You can also use my mortgage calculator to estimate the total carrying cost of owning a particular home.