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Deciding whether to rent or buy can be a tough decision. It’s often dependent on timing, location, and personal preference — not to mention the market itself. So how do you decide? Check out these five tips to determine if you should rent or buy:
Sort out your priorities.
What’s most important to you? Make a list of preferences and “must-haves” when it comes to where you live. The process will help define exactly what you’re looking for in your dream home regardless of whether you’re renting or buying it. Factor in things like location, your lifestyle, financial implications, your commute, your age, and your career. Once you have a better idea of what you want out of your home (and what you refuse to skip on), you’ll have an easier time narrowing down your decision.
Crunch the numbers.
If you don’t know where to start, check out this buying vs. renting calculator to help you break down the costs and find out what might make the most sense for your situation. Are you looking for long-term or short-term housing? The further out you plan, the better a mortgage might look to you. But there are many factors to consider, including the market and price of homes where you hope to live.
Weigh the pros and cons.
Renting has become increasingly popular in recent years, but there are always upsides and downsides to even the most promising trends. As a renter, you may not have full control over your living arrangements. That means you may experience some of the pains that renters complain about, like landlords and restrictions, limited customization potential, and the possible reality of your apartment community’s ownership changing hands during your lease term. These factors can make buying look more appealing, and buying does have its benefits. For example, there may be tax benefits. Home values also tend to increase over time, so buying a home may be an investment that allows you to build equity over time. And, of course, you have the freedom to decorate, renovate, and remodel as you please.
But the buying option also has cons. For example, living in a highly-populated, urban location could lead to a fun and rewarding lifestyle. But finding affordable options to buy in places like New York City, San Francisco, Seattle, and Denver can be challenging. These cities are some of the most popular places to live, but they are also among the most expensive places to own a home. In this circumstance, your money might go further as a renter. In comparing the value of an urban rental or a mortgage of the same price, you might find that the rental has a better location, restaurants, and shopping. Or you may be able to eliminate most of your commute, cut down on transportation costs, and spend less time sitting in traffic. It’s all about the best option that fits your lifestyle and makes the most sense.
Decide on a timetable.
Beyond the condition of the real estate market, you’ll also want to consider how long you are planning to stay there. Positive you’re sticking around for the long haul? Getting started on a mortgage for a new house could very well be the smartest play.
Make a plan and take action.
Remember, there’s no absolute rule that says buying or renting is the right or wrong decision. But no matter what you decide, make a plan. There are online tools and plenty of information to help you decide your own best course of action.
Want to chat with someone who can answer all of your questions? A professional loan officer from Mr. Cooper can walk you through the options when you call us today.
