The age-old questions that we all have at some point in our life: should I rent or buy a house?
Which one is better for me? Which one is cheaper?
We recently lived in an unprecedented crisis that affected our country’s economy. The real estate market experienced some of the biggest changes in the last 50 years, which creates in our mind numerous questions regarding deciding to buy a new property.
It is pretty clear that buying a house is way more expensive than renting it for most people. But, is this always the case?
Oxford Funding comprehends the importance of this big decision. After all, the place where we live is our private sanctuary, so it is crucial for us to determine where we should put our money.
In this blog post, Oxford Finance Services will answer your questions on these different topics:
- Renting vs. buying
- Is it a good time to get a mortgage?
- Advantages of renting vs. advantages of buying.
First of all, the main difference seems pretty obvious for most of us. When you rent a home, you need to pay a monthly amount of money to a landlord.
When you buy a home, the property will entirely belong to you once you are done paying for it.
Naturally, the primary way to buy a home in our country is with the help of a mortgage. Not all people can have access to a mortgage, and certainly, not all of them can afford one.
So, what are the differences?
- Building equity: it is not a secret for anyone that owners can capitalize on the equity of a property over time. If the home’s value goes up, your money will go up if you sell it. Yeah, there are some important interest rates to consider, but this kind of equity can’t be received through renting.
- Maintaining a property costs money: when you rent a home, the maintenance costs are generally the landlord’s responsibility. If you are a homeowner, you need to take care of your own maintenance costs. Be sure to consider this before making a big purchase.
- Tax implications: owning a home involves paying taxes while renting does not. It’s as simple as that.
This is the most essential point when deciding whether to buy or rent a house.
Do you want unlimited freedom to customize your home spaces? Then buy a house.
Do you value mobility over everything else? Then you should rent an apartment or a house.
There are a lot of questions to ask ourselves before buy or rent a house, so let’s get into it.
How long will you live on the property?
Are you a “free soul”? You don’t like to be constantly tied to the same place? Are you craving more flexibility?
Ask yourself this question: are you willing to live in the same home for at least 5 years?
If the answer is yes, then buying is a good option for you. Renting is a better option for people described as more nomadic.
Needless to say, you can buy a home and then sell it after 3 or 4 years if you want to, but the costs are not worth it.
What does your financial situation tell you?
Let’s be totally honest here: buying a home implies a lot of money. We all need a place to live, and for most people, renting is the primary option because it is simply cheaper.
Of course, mortgages are a great ally when it comes to buying a property, but can you afford debt?
A mortgage is not like a simple installment loan like the ones offered by Oxford Funding; mortgages are way more expensive.
Try to estimate the costs, analyze the different scenarios and then make a final decision.
Costs of renting vs. costs of buying
There’s no clear and precise answer when it comes to deciding if renting is better than buying.
Let’s put it this way: if you are going to live in the same property for less than 5 years, then renting is cheaper than buying.
On the other hand, if you think of the longest relationship with your new home, buying might be cheaper than rent over the long haul.
- Location costs: both renting and buying homes can increase or decrease the final price depending on the location. If you want to live in the center of New York, you’ll definitely pay more than living in Ohio, for instance.
- Upfront costs: buying a home requires doing a down payment, moving costs, renovation costs, and some home maintenance tasks.
- Costs of owning: as a homeowner, you will still need to pay mortgage insurance, property taxes, and more.
- Stability: if you get a fixed-rate mortgage, the payments won’t change.
- Flexibility for renters: renters are exempt from home maintenance and other duties related to homeowners.
Now that we have the bigger picture of what actually happens when rent or buying, it is time to make a final decision.
Don’t just simply look at your current situation: go one step further and consider the possible scenarios in your future.
Are you planning to have kids soon enough? Do you see yourself always living in the same city?
Yes, buying a home is more expensive at the begging, but here’s some important data that will make you take a firm choice:
The National Association of Realtors reports that a homeowner’s mortgage payment is lower than average rent after 6 years of buying a property.
Nonetheless, this doesn’t happen all across the United States but is still a good piece of information to consider.
So, if you don’t want to live more than 6 years in the same place, then renting is your best option.
Once again, it all comes down to what we want in life. That’s why it’s vital to keep ourselves educated. Our stability depends on our finances, so don’t take this topic lightly!