Should you rent or buy a home?

If you’re torn about whether you should rent or buy a home, there are many factors to consider before making your decision, such as location, level of maintenance and budget. Both options suit many different lifestyles, depending on your personal situation. We’ve compiled some of the considerations you should keep in mind to help make your decision a little easier when it comes to renting or buying a home.

When to consider renting

You aren’t ready to settle down

If you don’t know where you plan to live long-term, and aren’t ready to commit to one area, this is a sign you should stick to a rental. Buying a home is only a worthwhile investment if you plan to keep it in your possession for a long time. If you buy a home and sell it one year later, this will cost you a lot of time and money, not to mention the stress it may cause if you have to break your mortgage terms. Take some time to think about how committed you are to your location, which, in turn, will help you decide if renting or buying a home is your best option at this present time. 

You have short-term budget limitations

Buying a home isn’t always a realistic option for people. In fact, in most cases, it’s something that needs careful, long-term planning. If you’re just starting to think buying a home is something you’d like to do, you may have budget limitations that prevent you from doing so. Down payments and mortgage costs are big expenses that take time to save up for. Having said that, start saving now so you can meet that goal in the future. In the meantime, renting is a cheaper option with fewer costs attached to it. 

You aren’t ready to commit

Another consideration about whether you should rent or buy a home is if you’re prepared to take on the maintenance and commitment of homeownership. Owning a home comes with responsibility for maintaining and repairing anything that goes wrong with it, as well as completing upgrades or additions. If you aren’t prepared to be in charge of fixing issues in a home or making decisions on landscaping or furniture, this is when renting might be the best move. The maintenance of homeownership can be overwhelming, so it’s completely acceptable to not be ready to take on that responsibility just yet. 

You want to avoid entering a seller’s market

Finally, the real estate market is super competitive right now. High demand and low supply are fueling this situation, and it can be hard to find a home. Prices are higher than normal (normal being pre-pandemic), adding to the competitive nature of the market. If you don’t want to face this much stress and competition, it might be a good time to rent instead of buy. You must be fully committed to buying a home in this market, so if you have any doubts, that’s likely a sign it’s not the best move for you. 

When to consider buying

You want to stay in the area long-term

If you’ve found a location you love, it could be a good time to buy a home in that area. As housing prices continue to increase, it may be a good idea to purchase a home you love today instead of waiting, especially if you already know where you want to settle down. Buying a home also helps you build equity as your purchase gains value over time, which means you will be the owner of a valuable asset. Instead of renting, where you gain no long-term benefits from the property, owning a home will reward you in the future.

You have been saving for a down payment

As we mentioned above, buying a home comes with some upfront costs that often require long-term saving plans. If you’ve been actively saving for a down payment to buy a home, this is a sign homeownership might be a good path for you. Depending on how long you’ve been saving, and your budget, you might be in a good place to make this purchase now. Even if you don’t quite have the savings you require, homeownership is likely going to be part of your near future.

You can secure a low interest rate

Interest rates today are fairly low, meaning this could be a good time to get a mortgage. Interest rates dropped as a result of COVID-19 back in 2020, and although they are likely to increase this year, we aren’t sure when. Even when they do, they will still likely be lower than rates we saw in the recent past, before the pandemic. A low interest rate means you will owe less money on your mortgage payments, and therefore, save more money than you might have when rates were higher. 

The decision to rent or buy a home depends on your personal situation, which will be unique. It’s important to carefully evaluate your lifestyle, the considerations outlined above and your options before making this decision. If you decide buying might be the best choice for you, it’s a good idea to get in touch with a mortgage broker. Mortgage brokers can help you gain a clear picture of your situation, and what the best path is for you, making your route to homeownership easier and less stressful!

If you have questions about buying a home, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.