So, you’re looking for a place to call home for the next season of your life. The question is: Should you buy or rent your next house? Kim Borrelli, Assistant Vice President- Mortgage Loan Officer, shares three factors you should consider when deciding to buy or rent.
1. Consider your goals.
Do you plan to move within the next year or two? If so, you probably shouldn’t buy a house yet. According to Borrelli, “You typically need to own a house for at least three to five years before you can make your money back from selling it.”
However, if you’re ready to put down roots and plan to live in the area for more than five years, buying a house may be a wise investment for you.
2. Consider your financial future.
“If you’re buying a house,” says Borrelli, "you’re setting yourself up for future success.”
Why? Well, when you live in a rental, your monthly payment is just an expense that comes out of your bank account. You will never see that money again. However, when you own a home, your mortgage is not just an expense. Each month you make a house payment, you're investing in your future. Many people don't just recoup their costs but also turn a profit when they sell their house.
Buying a house can actually be a way to give yourself a more secure and stable financial future.
3. Consider the cost difference.
Both owning and renting a house come with unique costs. Understanding what you’ll save and spend in both circumstances can help you determine whether buying or renting is best for you.
Borrelli points out that, as a homeowner, “You have the financial responsibility of maintenance of the home, as well as any repairs to your home. Whereas, if you live in a rental, repairs are likely covered by your landlord under the lease agreement.” Also, buying a house requires several upfront costs that renting doesn't, such as a down payment and closing costs.
That being said, other homeowner costs may be more affordable than renting.
For example, rent payments often cost more than a mortgage. That's because most landlords charge enough to cover the mortgage on their rental, create a safety net for repairs and make a small profit. Not to mention, many property managers increase rent each time you renew your lease, whereas your mortgage payments will stay the same for the duration of the loan.
So, should you buy or rent?
Depending on your life season, goals and current financial situation, renting or buying could be a wise choice. Similarly, either decision could potentially lead to regret and frustration. It's essential to assess your circumstances in detail and make the best decision for your life right now.
If you think you may be ready to put down roots and buy a home, contact a lender at Southside Bank. We’re happy to help you determine if buying a house is right for you.