You’re ready to move to a new home, but should you rent or buy? There’s no getting around the fact that this is a complex decision for most people. Budget does play a big role, but there are other important factors to consider as well. Here are some essential questions to ask yourself when you’re deciding if it’s better to rent or buy.
Which Option Makes the Most Financial Sense?
Just because it’s a buyer’s market or a home is selling for a great price doesn’t mean the time is right for you to buy. You need to take a long look at your personal finances and determine if you can afford the costs associated with the home buying process. The upfront costs of buying include the down payment, closing costs, and costs associated with moving and furnishing the new home.
After that, you must factor your monthly mortgage payment, property taxes, homeowner’s insurance, private mortgage insurance (if your down payment is less than 20 percent), HOA dues, utilities, and home maintenance and repairs into your monthly budget. The upfront costs of buying may be less if closing costs are bundled together and then incorporated into your loan, but you’re still laying out a sizable chunk of change compared to renting.
Renting typically requires much less: a security deposit, first month’s rent, moving costs, and possibly furnishings. After that, you’re looking at your monthly rent, renter’s insurance (which is very reasonable), some utilities, and perhaps other miscellaneous expenses, such as laundry and parking. Of course, you’re not building equity in the property when you rent.
Are You Thinking More of the Long Term or Short Term?
In general, buying a home means you’re playing the long game. It comes with many more upfront costs than renting, but you have the opportunity build equity and eventually own the property. Down the road, you can rent it and enjoy the income stream, sell it and leverage the gains, or live the mortgage-free life. If you’re thinking that far ahead, then you may be in a good mindset to buy.
If you don’t plan on staying in the home for at least three to five years, however, then it’s better to rent, according to Money.com. It takes that long for home prices to appreciate enough to balance out the upfront costs of buying.
If you’re at a point in life where your future is a little hazy, then renting is smart. If you just moved to a new area and don’t know which neighborhood you prefer, or you’re thinking of getting married or having children, then you may want to sort out those matters before putting down roots.
How Much Responsibility Do You Want?
Owning a home comes with the responsibility of caring for it — mowing the lawn, shampooing the carpet, troubleshooting the dishwasher — and fixing things that break. If the roof leaks or the AC goes out, then you’re the one who takes care of the problem. You bear the cost and inconvenience, but you also have the power to take matters into your own hands without depending on your landlord.
As a renter, your load is much lighter. You must keep the home in reasonable condition, but you don’t shoulder the expense or hassle of maintenance and repair, and this can be a huge plus for many people.
Do You Value Flexibility or Stability?
If your answer is flexibility, then renting may make the most sense. For example, military service members know that flexibility is baked into the job description, but it may also be a priority if you’re an entrepreneur or free spirit who loves to travel spontaneously. It’s much easier to terminate a lease than sell a house, so renting is perfect for staying footloose. It also means your money isn’t tied up.
If stability is the name of the game, then home ownership may be a better fit. If you love where you live, want to keep your children in the same school, or seek to avoid annual rent increases, then it may make sense to buy where you are. Also, job stability goes hand in hand with home ownership.Whether you decide to rent or buy, CORT Furniture Rental can help you furnish and decorate your new space so that it instantly feels like home.