How does one know when it is time to stop renting and purchase your first home? There are many advantages to owning a home, but there are advantages to renting as well. In many cases, the question of renting versus buying comes down to lifestyle choice.
Renters have the freedom to move quickly and make impulsive lifestyle choices. If you aren’t sure you want to stay in the city where you currently live having the freedom to move when opportunity strikes is an advantage. Another consideration is job stability. Could you be relocated with little notice? Could you suddenly find yourself back on the job market? If so, renting makes sense.
But for many people, buying is a better choice. Although mortgage interest rates are no longer in the record lows, it is still cheaper to buy than rent in most parts of the country. For a comparison by area, visit the U.S. Department of Housing and Urban Development website.
When considering the advantages of buying a home, often the first things that come to mind are tax savings and investment. Homeowners can write-off property taxes and interest paid on a home loan. Renters have no similar tax write-off unless the rental home also serves as a place of business. Purchasing a home is also an investment in your future and a good first step toward retirement.
Additionally, buying a home brings a sense of stability that renting does not. Renters are not in control of their own housing destiny. Landlords can choose to raise the rent once a lease is up and there is little a renter can do besides agree to pay more or move. If you buy a home with a fixed mortgage rate your payment will only increase if property taxes or homeowner’s insurance increases. Landlords can also decide to sell the property with little warning or simply decide to no longer rent to you. Having to continuously move is expensive and exhausting.
Homeowners also have the ease of mind that comes with taking charge of your home environment. You can plant a garden or redesign the yard if you wish. You can paint the walls any shade that you desire and no one can dictate whether or not you can adopt a pet.
Despite the desire to own a home, the question of renting versus buying can be decided by factors outside one’s control. The tightened credit standards are challenging for young, first time buyers who have had little time to build a solid credit history and overcome credit mistakes. Entry level wages and student loan debt can also affect a first-time homebuyer’s ability to get a loan.
But, don’t be discouraged. First time homebuyers should meet with a financial planner or professional mortgage loan officer to discuss options. Approval is often easier to obtain than people think. With a little financial discipline and planning you can definitely reach your homeownership goals.
Plus, if you are secure in your job and you do not plan to move within the next five years, buying can save you money in the long run. Owning a home for five years or more is a solid investment. Just remember to prepare for additional costs beyond the monthly payments. If something breaks, there is no landlord to fix it.