Renting vs Buying a Home
Find What Works for Your Lifestyle and Budgetary Needs
Have you ever waited for your landlord to replace some dry rot or wasted hours at the laundromat because the dryer that came with your place had been broken for months? When it comes to your living space, you don’t want to wait.
Owning your home can help those pesky issues disappear. However, buying a home is a big decision and one of the largest purchases you’ll make in your lifetime. Whether you need more space because of your growing family or you live on your own, it’s always wise to take a look at the pros and cons and crunch the numbers before you become a homeowner.
Renting Can be Great
With renting, you’re not tied to one place or destination. You can pack up and move where ever you want. You can break a lease with few consequences and your living expenses tend to remain the same without the cost of repairs, yard maintenance, or other home-related expenditures.
Renting Has its Downsides
Dealing with slow repairs can be frustrating, but most importantly, rental leases expire. When faced with a $500-1,000/month increase, either you pay the money, or you uproot your life and move to another rental that could have a rent increase in a year or so. Your money flies out of your wallet and into your landlord’s bank account. Basically, you end up investing in their future and not your own.
The Upside of Home Ownership
The most rewarding thing about owning a home is having your own space. You can hang family photos on the wall without worrying about losing your security deposit. In addition, the financial benefits of a fixed-rate mortgage ensure a stable monthly payment that doesn’t fluctuate like rent.
When it comes to tax deductions, you can often deduct your annual mortgage interest, your mortgage insurance premium, and your property taxes. If you have a fixer-upper, there’s an added incentive. Interest incurred on loans for renovation and construction can count toward your annual deductions.
Some of the Negatives
Not all costs of home ownership are fixed. There are fluctuations in property taxes as well as home insurance, depending on where you live. Plus, the total cost of ownership includes yard maintenance, repairs, and monthly utilities.
Rivermark Bonus: We’ll lump your property taxes in with your monthly payment, so you won’t need to worry about it.
In order to make an informed decision on whether you can afford to own your own home, consider the full costs of ownership, how long you plan to stay in the home, and the current housing market.
Costs of Buying
A number of factors influence the total cost of a home and your monthly payment. Using the Rivermark Rent Vs. Buy Calculator can give you an accurate idea of those costs.Rent vs Buy Calculator
Your initial costs will be the down payment, based on a percentage of the home purchase price. A 5% down payment on a $400,000 home would add up to $20,000. Your monthly mortgage payment will include PMI (Private Mortgage Insurance), which can add hundreds of dollars to every payment.
Another cost is homeowner’s insurance. The total annual cost can range from $400 to $3,500 per year. At Rivermark, we make things easy and add that cost to your monthly mortgage payment.
There are multiple opportunities to either increase or decrease your monthly payment. Qualifying for and choosing a 15-year loan will often increase your monthly payment while decreasing the amount of interest paid by thousands of dollars over the life of the loan. See a list of our current mortgage rates and decide what type of mortgage is right for you.
For first time home buyers, there are a lot of ways to help you become a homeowner. Check out our First Time Home Buyer options and start dreaming about your first home.
For the Long Haul
Ultimately, the most important consideration is how long you plan on living in the home. If your current monthly rent is $1,500 and you want to purchase a $400,000 home, you would need to live in the home for at least 4.1 years just to break even.
Rivermark Has Answers
Depending on the market, affordability, and your personal needs, the Rivermark mortgage team can help you decide if it’s time for you to stop renting and start dreaming of your own home. Visit our home loans page, stop by any branch or give us a call at 503.906.9497.