Renting vs. Buying: Which One's Right for You?
By Keith Loria
Today’s real estate market pluses include low mortgage rates and attractive prices, but purchasing a home is still difficult for many Americans. Renting and buying both have their benefits and challenges depending on each person's circumstances. It's important to weigh the pros and cons.
According to a 2010 study of the Joint Center for Housing Studies of Harvard University, over the last five years, the number of renter households rose nearly 10 percent (3.4 million).
A good rule of thumb when considering whether to rent or buy is to predict how long you will stay in the home. If you plan on moving and selling in less than five years, renting is probably a better option right now.
One of the main factors keeping people from buying is the difficulty in obtaining the mortgage they want to afford the property they desire, causing them to either shop for something smaller and less expensive, or rent for a while until they can improve their financial situation.
The main problem most people have with renting is that you won’t be gaining equity and it feels like you’re throwing your money away. Plus, there’s no tax advantage to renting and you are limited with what changes you can make to the home.
Still, there are many benefits to renting. For one, you don’t need to make a long-term commitment, and it gives a future homebuyer the flexibility and time to figure out the best course of action both personally and economically. Other positives include being able to move when the lease expires, there’s less maintenance work required, and you don’t need to have a large sum of money available up-front to live in a nice home.
For those that choose to buy, over time the mortgage balance decreases and equity builds. You also have the freedom to make any decisions you want—including tearing down walls, building decks and remodeling any room the way you have always dreamed.
While every situation is unique, there are a plethora of rent vs. buy calculators available on the Web that can also help make your decision easier.
To discuss whether renting or buying is right for you, contact our office today.
Reprinted with permission from RISMedia. ©2013. All rights reserved.