As rent and home sale prices continue to increase, first time home buyers living in expensive metro areas really need to weigh the pros and cons of buying versus renting. Ultimately, the answer depends on multiple factors, including your finances, your long-term plans and the real estate market in your specific area.
How long do you plan on staying?
Buying tends to be better the longer you stay because the upfront fees to purchase are spread out over many years. These fees can include inspections, appraisal, mortgage costs and insurance.
It’s cheaper buying than it is renting.
Remember, your landlord is in it to make a profit. If there was no profit left for them, they would likely have the home you are renting up for sale.
Mortgage rates are still low.
While mortgage rates have risen slightly, they remain at attractive levels. But you don’t know how long they will remain there.
Home prices are rising.
While they are low compared to the peak in 2007, home prices are on the rise. The amount of inventory on the market is low and the law of supply and demand dictates that prices will continue rising.
Loans are becoming easier to qualify for.
There are many new and very attractive lending options.
Avoid the coming rent increases.
Typically rent prices only go up. If you have a long-term lease you may have some protection against this, but usually, a 1-year lease allows your rent to increase when it is time to renew.
Invest in your future.
Consider the cost savings on an annual basis. Do you get a tax deduction on your mortgage interest paid. Also, if your plan means you will stay in the home for more than two years, it is very likely you will make a considerable profit on the sale of the home when it is time to move.
Down payments may cost more than a first-month rent, but we have ways you can have a zero down payment program allowing you to get in a new home with minimal costs. Many times it is less than the amount of a first month rent payment and security deposit. We do this for people quite frequently and they are happy with the results. The fact is every time people move, most people lose a big chunk of the security deposit. That’s cost of the next first month rent plus deposit is considerably higher than the last time.
Some people think that by renting, they avoid paying property taxes, insurance, and maintenance. The reality is rent payments cover the landlord’s mortgage payment, property taxes, property insurance, plus a monthly profit. Every time the rent is increased, most of it adds to his/her profit margin. Buying a home can be a great investment. The home prices in your area have been rising consistently for over 5 years. This means buying now can help you stay in a neighborhood that you could otherwise be priced out of in a few years. Even if you don’t end up staying in the home long-term, a sharp rise in local property values could mean a sizable profit when you decide to sell.
No two situations are the same. Bottom line, do what you are most comfortable with.
Call Caron today for a Consultation to help determine which is best for you short and long term.
Our clients thank us all of the time, we always do what is best for them, and that is why our business is built on referrals.
Caron Koteles Riha is a licensed Real Estate Broker with Real Estate One.
She can be reached at 248-379-6651 or Caron@CaronKoteles.com
Comments are closed.