When it comes to making the decision to buy a home, most first time home buyers are moving out of a rental property. To make the leap into home ownership takes some serious thought and preparation. But often, there is a debate about whether or not it is better to own a home or rent without the longer term responsibility. Both sides have their positives but what it really boils down to is what works best for you and your family. Every situation is different so you need to make sure to weigh all the options before making a decision. Here are some things to consider when deciding how to proceed:
Time Frame
If you are moving to a location on a short-term basis, then you should think long and hard before buying a home. Buying a home may seem like a great value when the rental rates are high but there are quite a few costs associated with the purchase of a new place; inspection fees, appraisal fees, closing costs, title insurance, home owner’s insurance, etc. Not to mention the cost of house and yard upkeep.
On the flip side, if you are planning on staying for several years, then buying might be the best option. Rental rates are never locked in but your mortgage can be fixed depending on your loan type. You can start earning equity in your home and it is an investment rather than just a short-term place to lay your head.
Upkeep and Equity
Many people want to move from a rental space so they can have more space and build out their space the way they want. In an apartment, all you can do it paint but in a home, you can knock out a wall if you want. The cost of a rental means that you don’t have to worry about the roof, plumbing, HVAC system, and all the other bits and pieces that might break over the length of your stay. In a home however, the maintenance is your responsibility. But that can also be a benefit down the road. When you invest money into your home by updating an outdate bathroom or building on a beautiful wooden deck, you reap a two-fold return on that investment. First, you get to enjoy all the fruits of your labor with a great new space. Second, when you go to sell your home, you can use that added value to your advantage.
Space and Privacy
If you are considering leaving the apartment life behind you because you need more space, you will be hard pressed to find a rental community that can offer you the space that a home can. Most apartment communities max out at 3 bedrooms and don’t have much of availability in the larger ranges as it is. When it comes to extra amenities like garages, outdoor storage, attics or basements, and outdoor space, you have pretty much ruled out everything but a home. Not to mention the fact that homes often do not share any walls (or much fewer in the case of townhomes) with another person. For people that need space to spread out and the freedom to do so without a neighbor listening to their every move, home ownership wins, no contest.
Tax Advantages and Mortgage Rates
A lot of people are keen to purchase now to take advantage of the still low mortgage rates. Housing prices have started to rise but mortgage rates have remained steady over the past few years. First time buyers are wanting to take advantage of the favorable market before there is an upswing in the lending rates so they can lock in their dream home without breaking the bank. On top of that, there are tax incentives for individuals and couples when they pay interest on their mortgage at tax time. It is always nice to see some money come back to you after you have paid in all year long. When you are paying rent, none of that money is refundable so it’s a wash.
Renting versus buying is not a decision to take lightly. As a potential buyer, it is invaluable to do your research about the market that you are planning to move to, take a hard look at your finances, and look at your long term plans. Take the time to speak with a financial advisor so you know what you can realistically afford. Ultimately, the final decision is yours.
If you are planning to make a move, contact our professionals at Metro Brokers Financial. They can guide you through the lending process and make sure you have all the tools you need to make a great decision for your future. Find out more at www.metrobrokers.com/mortgage or call 404.843.2500.
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