The rent or buy conundrum is something just about everyone struggles with at one point in their lives. It’s confusing when you begin to delve into the particulars and it becomes even more complex when you run the numbers. Because the upfront costs are more expensive with a home purchase, most people start out their adult lives renting. That’s certainly understandable and sensible — a significant life change like a new job opportunity might come along or something else might change their circumstances. But, there will be a point when you wonder whether it’s better to rent or buy a home.
Rent vs Buy: What’s the Best Option?
About 63 percent of the country are homeowners, though that figure fluctuates between 62 percent and 70 percent, since the middle part of the twentieth century. But, this doesn’t mean homeownership is something everyone should jump into. For instance, if you know you’ll only live in an area for less than five to seven years, it’s probably more financially pragmatic to rent. Conversely, if you are staying put for more than five years, then you might take advantage of big FHA loan benefits and buy.
“Which is the better financial move: Owning a home or renting one? To a large extent, the answer depends on your location, the market environment, your family situation and your lifestyle preferences. Because paying for a place to live is most people’s biggest lifetime expense, weighing the options is critical to your financial well-being. While buying is undeniably an investment, it’s a far different kind of investment than buying stocks or bonds, which are optional. Everyone needs a place to live.” —ABC News
Of course, cost is always the largest consideration. While you might strike a bargain and buy on the cheap, you’ll still have to avoid any home improvement budget busters. That’s not a concern when you rent, because you aren’t responsible for such improvements. But, what’s really the best decision for you and your future? should you rent or buy a home and which is the better choice? Well, the answer depends on a few factors.
Three Reasons to Rent
There are legitimate reasons to rent instead of buy. No, it doesn’t mean you can’t afford to buy a house and it doesn’t mean you’re going to miss out on something important. Here are three reasons to rent instead of buy:
- No long-term obligation. When you rent, it could be leased from month to month, for a year or two years. The point is you aren’t stuck in the same place forever. You can easily move when the lease ends for whatever reason. If you owned a home, you’d have to sell it before you could buy another and move.
- Time to improve your credit. Renting is a great option to improve your credit score because it will be reported to the credit bureaus. If you rent an inexpensive place, it will also give you time to save money while you’re improving your credit score.
- No major maintenance costs. The single biggest financial and convenience factor to renting is you don’t have to pay for major repairs and/or replacements. So, if a pipe bursts, you won’t have to pay a plumber to fix it. And, if the air conditioner dies, you won’t have to replace it.
Three Reasons to Buy
Now, there are also good reasons to buy a home. You just need to be sure you can afford the extra costs like property taxes, insurance, and repairs and replacements. If you can afford the carrying costs or holding costs, here are three reasons to buy:
- Fixed housing payment. When you buy a home, you lock in your housing cost and won’t face the reality of raised rent. Make no mistake about it, when you rent, that monthly payment will increase just about every year but that won’t be a concern if you buy.
- Ability to build up equity. Buying a house means that the down payment and all your mortgage payments will help to reduce the principal balance. That provides you with higher and higher equity, which is definitely a good thing for your long-term finances.
- The property will appreciate. Not only will you build equity in the home, the property will also appreciate in value over time. In a decade, it will be worth more than it is today and in twenty years, it will be worth even more.
If you are considering buying a house in Orlando’s Hunter’s Creek, or another community, contact us for the latest market information. We are local and experienced in all facets of residential real estate, here to help you, when you need it.