Should I Buy or Continue Renting?
The lease is up for renewal, and you’re wondering if now is the time to buy your own home or if you should continue renting for another year. Buying has long been considered a part of the American Dream, but that doesn’t mean it’s right for everyone. Your financial situation, family size, goals, and other factors will determine whether you should buy or continue renting.
If you’re on the fence and unsure of which is the best way to go, take a look at a few factors that can help you decide.
How Much is Your Rent?
In many parts of the country, rents are on the rise. Depending on where you live, you may pay less per month as an owner than a renter for the same size home. The New York Times has a new calculator that can help you figure it out, but the magic number they’ve reached is $884. If you can buy a home similar to what you have now for less than that, you’re paying too much for rent. Home values are on the rise but a 30 year mortgage will buy you more house than you may realize.
How Much Control Do You Want?
Owning a home means you can do almost anything you want to it. You can paint it any color, remodel it, add new appliances, tear out walls, and generally make it your own. You also decide if you want a pet and what kind. Note: Insurance companies, building codes, and homeowner associations do have rules you may need to follow. If this is important to you, you may want to buy.
Can You Afford Repair and Maintenance?
A big benefit to renting a home is that you don’t have to pay for major repairs like broken pipes or a new roof. When something breaks, you call the landlord or property management company, and they take care of it. Of course, you may also have the kind of landlord that doesn’t respond quickly or one that only offers the cheapest fix to any given problem. When this happens, you have three options: live with the hassle, find another place to rent at the end of your lease, or buy a home.
How Much Do You Have in Savings?
Outside of the repair and maintenance costs, buying a home requires a certain amount of cash in savings. As a renter, you usually only have to come up with a security deposit and the first month’s rent. Even if your landlord requires first and last month as a deposit, it’s still cheaper than a down payment when you buy. But the 20 percent down payment you’ve heard about isn’t always a requirement. Many loan programs allow you to put down much less than that, and if you’re a first-time homebuyer, you may qualify for assistance programs to help pay your closing costs.
What’s Important to You?
Ultimately, if cost isn’t an issue, you have to decide what’s important to you. Do you want a life where you can pack up and move on short notice? Renting may be perfect. On the other hand, if you want to put down roots, raise your family, and have control over your life, buying could be the best option for you. There’s no one right answer. Buying or renting is a personal choice based on your finances, your needs, and your goals.
Never Neglect Insurance
It doesn’t matter whether you buy or rent, you need a good insurance policy. If costs are a consideration in your choice, it’s important to know that a homeowners insurance policy will be more expensive than renters insurance. Both, however, can give you peace of mind when disaster strikes and both help you put your life back together. In most cases, neither is optional anymore. Many landlords require renters insurance as part of the lease agreement, and mortgage companies won’t let you close on your new home until you have a homeowners insurance policy in place.
Whether you’re buying or renting, contact us at Ross Insurance. We’ll make sure you have the right policy that fits your life and your budget.