The Good, the Bad, and the Beautiful of Owning vs Renting
If you’re renting, and wondering if it makes sense to buy a home, your head is probably exploding with all the variables to consider.
Sure there are a lot of advantages for first time home buyers. And we’d be happy to talk to you about those. But how do you balance out the tangible, and intangible, pros and cons of buying versus renting?
Tax Advantages — As most of you know, and your tax accountant has probably already mentioned, your monthly payment for rent has no tax deduction available (unless you have a home office or some similar exception.) But the calculation of your monthly mortgage payment includes interest, which is typically deductible.
Equity Investment — Naturally, when you’re renting you’re basically paying off someone else’s investment. When you leave you take nothing with you except the satisfaction of having had a home for the time you lived there. Which isn’t a bad thing, but it isn’t a great thing either.
No Rent Hikes — Unfortunately, most leases only guarantee your rental rate for a year, maybe 18 months. After that you’re subject to an increase. When you own your home your payment is locked in according to the terms of your mortgage.
Shifts in the Market — We know you’re all aware of that. None of us are likely to ever believe in a stable Real Estate market again. We are seeing a recovery in the market, along with a slight rise in interest rates. However, regardless of the market or interest rates, the best thing you can do to overcome that uncertainty is to do your research about the area you’re investing in, do your due diligence on the home you’re considering investing in, and most of all — choose a loan officer who will guide you into the right kind of financing for your situation.
Unexpected Costs — First time home buyers are often unprepared for the additional costs involved in buying and owning a home. You’ll need to factor in closing costs, agent fees, insurance, and property taxes. The New York Times published a handy calculator that helps you balance the expected costs of buying against the costs of renting.
Repairs and Maintenance — It’s so easy, when something goes wrong in a home you’re renting, to make a phone call and say, “Fix it.” If your landlord or management agency is responsive and takes good care of the property that can be worth a lot. When you own your home you’ll want to have a “rainy day” fund for those kinds of surprises. On the other hand, if you intend to be in your home for any length of time, it’s nice to be the decision maker about the quality of repairs or replacements.
It’s yours — Ultimately that’s what most of our clients want; a place they can call “home” that feels like home to them.
They want a place where they can decide if they want tile or hardwood in the entry way. A place where they can paint the shutters apple green if they decide that’s what they want to do. A place where they can let the kids and the pets in and not worry about what someone else will say if the pets scratch the floor or the kids color on the walls. They want a place where they can plant a seedling and stay to watch it become a tree.
Our people are here to help you make the best decisions about your investment and your mortgage — but no one can help you weigh out what it means to have a home to call your own.