If you currently live in an apartment or other rental, then you’ve likely wondered if it would be cheaper to just buy your own home. This is a common question, but the answer is complicated. Whether or not it would be cheaper to buy or rent a home really depends on a variety of individual factors and considerations.
Flexibility and Breaking Even
If you plan on staying in the same area for an extended period of time, then it might make sense for you to buy instead of rent. Over time, you can build equity in your home and even borrow against that equity, if you wish.
After 3 years of owning a home in Baltimore, most homeowners break even when it comes to buying over renting. However, if you only plan on staying in a location for a year or two, you might find that renting is the better choice for now. When you move out of an apartment, the process is quick and easy. When you decide you sell your home, it is a process that can take a little more time.
When you rent an apartment, you usually pay at least a security deposit and the first month’s rent upfront. You also usually have to pass a credit check. When you buy a home, meanwhile, you provide a downpayment and have a mortgage payment. You also have your credit score evaluated in order to qualify for the mortgage. Both of these scenarios require careful financial planning and, usually, savings.
It’s also important to keep in mind that homeownership comes with expenses that rental tenants don’t usually pay. This could include certain utilities, like trash or water, that are sometimes paid by landlords, as well as unexpected home repairs. When you own a house, it’s recommended that you put aside a small percentage of your home’s purchase every year to pay for emergency fixes and expenses.
If you’re used to renting, it can come as a financial shock to suddenly be paying for appliance breakdowns or roof problems. You’ll also be responsible for lawn care, snow removal, and other routine maintenance tasks. These are all important things to consider when deciding the best time in your life to buy a home.
The Downsides of Renting
While you take into account many financial considerations when deciding to buy a home, it’s also important to keep in mind that renting can have its own hidden costs. For extra protection, you might want to take out a renter’s insurance policy. If you have a pet, you might have to pay a pet deposit or cleaning fees. Most of all, if something breaks down in your apartment or if you have another concern, you’re pretty much at the mercy of your landlord. How quickly a landlord responds to your requests can make or break a renting experience. When you own a home, you pay the costs, but you also control the end result.
One of the things that people most enjoy about buying a home is that the money that they pay toward their mortgage doesn’t just go to another person; they are paying toward their eventual ownership of the property.
Deciding to Buy a Home
Both renting and buying have their pros and cons. What’s best for you at this point in your life may not be what is best for someone else, and vice versa. For many of us, finally owning a home feels like fulfilling the ultimate American dream. It’s an incredible experience, but it’s important to go into this major purchase with eyes wide open.
Are you ready to buy your first home? Looking to sell your current house? Contact VSells & Associates today. Our team of highly experienced Realtors will help you find the home that is just right for your budget and for your family.