Whether you’re fresh out of college and just starting adulthood or looking to make your first home purchase to start or grow a family, we have your guide for navigating the tricky transition from renting to buying.
So first things first: To buy or not to buy? Well, if you’re used to paying rent and living life one lease at a time, there’s freedom in the flexibility to keep moving. Plus, taking the step to purchase your first place can be flat-out intimidating.
For others, however, the benefits of buying a home far outweigh the benefits of renting. This is especially true when interest rates are low because it makes the cost of renting surprisingly more expensive than buying. But even in a rising rate market like the one we’re in currently, there’s comfort and peace of mind in knowing you can lock your rate and make monthly payments toward your equity rather than a landlord’s. Keep in mind that there are pros and cons to both living situations. The right choice will depend on your finances, your lifestyle, and ultimately your goals for the future. Let’s get into it, shall we?
The pros and cons of buying.
The pros of homeownership are many. Enjoy free and secure parking (hello, garage). You no longer have to share walls with noisy next door or upstairs neighbors. You have complete and total freedom to make home renovations and upgrades without worrying about getting your deposit back. Everything is up to you, and that’s the beautiful thing about it. Freedom.
Beyond the immediate upsides, there is also the financial element to consider. With homeownership, you make monthly mortgage payments for yourself, not your landlord. It’s an investment that allows you to build equity for the future. If you value stability, for example, you may enjoy the benefits of a fixed-rate mortgage. At a fixed rate, your monthly payment would be consistent and predictable over the life of your loan.
Many homeowners also enjoy tax benefits and savings. Depending on your financial situation, mortgage interest may be deducted from your state and federal income taxes, and a portion of your property taxes may also be deducted. We recommend consulting a tax professional about your specific situation to see how the tax savings benefit of homeownership could apply to you.
On the flip side, buying a home is an investment. There’s no doubt about it. For many, homeownership marks the most significant financial decision they’ll make in their lifetime. For that reason, the cost of saving for a down payment is the biggest hurdle to homeownership. Luckily, there are many down payment assistance and community lending programs out there that are designed to help make homeownership possible.
Why buy?
- Renovations benefit you
- Freedom to make your home yours
- No pet fees
- More outdoor space to call your own
- More privacy
- Easier to put down roots in an area you love
- More consistent budgeting with a fixed-rate mortgage
- Your monthly payments help build home equity
- Eligible for more tax benefits
- Paying off your mortgage builds your credit score
Why not buy?
- Have to pay for your own maintenance and repairs
- Longer commitment
- The process can be more involved than applying for a lease
The pros and cons of renting.
While buying provides things like the ability to build equity and the security to plant roots, renting still has some perks. You’re not tied down to an investment or single location. Maintenance and home repairs are often included in rental agreements. And many apartments are located in proximity to city and metropolitan attractions.
Leases generally range from 6 to 12 months, but some landlords or management groups allow shorter lease terms. With renting, you get to experience different neighborhoods, cities, and states before you decide this is where you want to stay long-term. That means you can sample different styles of housing.
On the flip side, however, rental payments go to a landlord’s equity, not yours. Your living cost each month does nothing for you long-term. Then there are the realities of things like complicated parking, noisy neighbors, and the cycle of having to renew for a higher rate or pack up your things and move. Again. And again. And again. If you’re rented, you know the cycle.
Why rent?
- Can live closer to more dining and entertainment options
- Maintenance and repairs are handled for you
- More flexibility for short-term plans
Why not rent?
- Renovations benefit your landlord more than you
- Less freedom to personalize your home
- Restrictive pet fees and policies
- Less outdoor space
- Noisy neighbors on the other side of the wall
- Have to renew your lease frequently
- Rates might increase each time you renew
- Can’t build equity or credit
Final thoughts: To buy or to rent?
In the battle of buying versus renting, it’s up to you to decide. We hope this blog helps lay out the realities of both so you can make the right decision. Just remember that homeownership isn’t a ball and chain—it’s an investment with more unique options than you might think. Who said renting had exclusive rights to flexibility, after all?
Curious about the process? Talk to one of our mortgage experts today. They’ll help you decide if now is an opportune time to take on a mortgage and pursue the exciting life milestone of homeownership. Ready to make moves? Get pre-approved to stay competitive in the current market.
Homeownership is an investment with more unique options than you might think. Who said renting had exclusive rights to flexibility, after all?
