November 23, 2017

Renting vs. Buying

Making the decision to rent or buy a home can have big financial impact on your future.  It’s important to know when is the right time to buy, and when it makes more sense to rent.  There are a few factors to consider, from your eligibility for a mortgage to rate at which home prices are rising.

Long-term, buying is typically a better financial option than renting.  Over time, your mortgage payment stays stable while rent payments tend to increase.  In addition to tax savings, home values generally increase over the long term, giving buyers a solid investment.  Your money finds its way back into your pocket instead of simply going to a landlord or leasing company.

Buying, however, means being ready to qualify for a mortgage as well as having the savings for a down payment. School loans, credit card debt, and other considerations can make it difficult to obtain a mortgage.  It can also be more difficult to save up for that down payment when paying off previous debts.  Talking to a financial adviser can help you come up with a plan to stay on track to becoming a homeowner.

Are there times when renting makes more sense?  Of course!  If home values are rising slowly and rent costs are stable, renting can actually save money over time.  It’s also often a more attractive option for those who want the freedom of easily relocating.  Month to month, the cost of renting can be lower if certain costs such as utilities are included and costs such as home insurance, major repairs, and replacement appliances are covered by the landlord.  Be sure to carefully read a lease agreement and ask questions if such things are unclear.

Before talking to a professional, you can do a bit of research online with an interactive calculator or comparative chart.

 

 

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