Buying a home is a big decision, and probably one of the largest purchases you’ll ever make. But purchasing a home is more than just a transaction; it’s an opportunity to gain independence and build equity. Perhaps you’ve been a long-time renter looking to take the next step into homeownership. Or maybe you’re a potential first-time homebuyer ready to jump into the market. A life-changing commitment like this one leaves many potential homebuyers asking the question: “Should I rent, or should I buy?”
As Steve Greiff, SVP, Director of Mortgage explains, there is no one-size-fits-all answer. Ultimately, there are several factors to consider in determining what’s right for you. The first step is to seek out education to understand the homebuying process, your current financial picture, emotional readiness, and future plans.
Pros and Cons
The “pros” and “cons” of renting versus buying will be shaped by your unique preferences and values. While owning a home may require more upfront costs and responsibility, there are many benefits, including:
- Pride of ownership
- The chance to build equity
- Freedom to renovate
- Privacy and independence
- Potential annual tax advantages
On the other hand, if you are not ready to put down roots, renting may offer:
- Easier mobility in the short term
- Fewer upfront costs
- Limited responsibility for maintenance and repairs
Pride of ownership
|Responsible for maintenance
||Limited freedom to renovate
||Fewer upfront costs
||No ability to build equity
|Freedom to renovate
||Limited responsibility and maintenance
||Less privacy and independence
|Privacy and independence
||Rent may increase over time
|Potential tax advantages
Housing Market Trends
Demand continues to remain high and inventory low, leading to increased home prices in some parts of the country. With sellers avoiding contingency sales and some buyers paying fully in cash, it’s a competitive environment to say the least. Bidding wars are common, and well-priced homes are often sold in hours or days.
Although the housing market can be intimidating, keep in mind the market is constantly changing and can shift quickly. While housing prices remain higher than what they were this time last year, we’ll likely start to see some price easement over the course of the next 12 months. It’s impossible to predict entirely, so while being aware of market trends is important, it’s even more critical that you plan for the things you can control. Start by evaluating your personal situation and how buying a home will intersect with your lifestyle and goals.
The market can shift quickly. Get out there and ask questions so you can understand your current readiness and what steps you can take to improve your purchasing power. This way, you will be ready to jump in when the time is right.
Evaluate Your Readiness
1. Emotional Readiness
Buying a home is a commitment to more than just a home – but also a neighborhood, a community, and even a financial partner. Are you ready to put down long-term roots?
The process can also be time-consuming; you may look at up to 20-30 houses before finding the right one for you. You’ll need to stay patient, especially in a competitive market.
2. Time Horizon
The second factor to consider is how long you plan to live in your next home. This is a key question, especially for young people or those planning to grow their family. Does the duration that you plan to live there match your family plan? Can you grow into this home?
3. Your Personal Financial Picture
If you’ve never owned a piece of property, your ability to buy a home might feel like a daunting task. A trusted mortgage loan officer can provide information on the diverse range of financing options and affordable home loan programs available to you, depending on your unique financial position.
There is no static recipe card for buying a home. Many factors will play into your eligibility. With the array of financing options available, you may be surprised to learn that buying a home is within your reach.
4. Other Lifestyle Considerations
Deciding where you want to live will help you determine whether renting or buying makes more sense. Is there real estate available in your desired location?
Consider your non-negotiables and proximity to amenities. For example, how far is the drive to get groceries? What is the commute time to work? Are there good schools in the area?
Is your job stable or do you plan to relocate in the next few years? Does your job require you to travel often? If so, will you have the time to commit to the maintenance a house will require?
Factor in the Opportunity Cost
It’s a common misconception that renting is always a cheaper option. While a mortgage payment and rent might be similar on a month-to-month basis, the difference in home ownership is that you’re investing the money in yourself and your future. Put simply, the choice comes down to this question.
Are you ready to start building your own equity, or would you rather pay someone else's mortgage and build their wealth and equity?
Work with a Trusted Professional
We want to empower you to make the right decision for your short and long-term goals. If buying a home is your dream, we can help you get there. Our mortgage loan officers will talk through each aspect of the homebuying journey and provide personalized financing options.
Ready to get started? Contact a mortgage loan officer today who will help you begin paving your path to homeownership.