Every first time home buyer has to address this question at some point in life. Home ownership is connected to ideals of the American Dream, provides a sense of stability, and can make a lot of financial sense. But is it best for YOU?
You May Want to Buy if:
- You’re ready to build wealth. As a tenant you are paying your landlords mortgage and therefore increasing someone else’s wealth. Home ownership allows you to pay yourself as each payment increase the equity you have in your home. Studies show the average home owner has over 30 times the net worth of the average renter. Locally we tend to see fairly steady price gains on an annual basis. As a renter appreciation and inflation will leadto higher monthly payments while home ownership allows you to keep your monthly payment steady while gaining value in your biggest asset.
- You’d like to save on taxes. Home ownership offers many opportunities for tax savings.
- You like freedom. As a home owner the home is yours. Decorate, build, and live as you please for as long as you own the home. While there are typically neighborhood and municipal code restrictions that do limit some things you can do for the most part this holds true and therefore you can truly make your home your own.
- You’re stable. You know where you want to be and don’t foresee leaving anytime soon.
You May Want to Rent if:
- You’re short on cash. Renters definitely have upfront costs with items such as first and last months rent and a security deposit, but that can be easier to handle than finding a down payment, covering closing costs, and paying for any inspections. But keep in mind there are many programs available for first time buyers that allow for minimal down payments. So even if you’re short on cash, if you plan on staying for awhile you may not need to worry so much about saving up for a large down payment.
- You’re uncertain about your future. If you’re not sure how long you’ll be in the area, how quickly your income or family may grow, or if you’re in the right neighborhood it may be wise to sit on a rental for a little while until you’ve gained some clarity on the near future. However, if you’re interested in a little sweat equity finding a place to clean up a little may provide you a good return on your money even if you have to move quickly.
- You’re not into maintenance. While renting you’re pretty much in the clear regarding maintaining the place. If the sink stops draining, fridge dies out on you, or heat only runs at the level of extreme sweat then you can simply call the landlord and typically you’re covered. As a homeowner the costs and work involved in fixing these and other issues become yours. A good option for some people may be condo ownership. As a condo owner the association often takes care of outside issues like lawn maintenance, roof repair, and snow removal while unit owners cover repairs within their own residence
To analyze your individual situation check out this calculator from the New York Times or contact us to discuss what home ownership may look like for you.