According to the U.S. Census Bureau, the national homeownership rate in 2022 was 65.4%. That can be attributed to the fact that many people have been racing to buy a home over the past two years, spurred on by record-low mortgage rates and fierce competition. But with home prices still at historically high levels, people who can’t afford the inflated prices are choosing to wait out the market instead.
So, how do you choose between renting a house and buying one? Here’s how to decide:
Financial Considerations
Buying a home has its own advantages – as you pay down your mortgage and the property value increases, you’ll build equity. You can even borrow against that equity to finance other big goals. But do you have enough savings to buy a house? Even when financing a home purchase, you’ll need to put down some money upfront (ideally 20% of the home price). Keep in mind that homeownership also comes with other associated costs, including closing costs, property taxes, insurance, and maintenance.
If you don’t have much saved up, it may make sense to rent for a few months and work on your savings and credit. After all, the best mortgage products are available for those with good credit scores and large down payments.
How Long You Plan to Stay
Generally, buying a home is a good idea if you’re planning to stay put for at least three years. Keep in mind that you might pay more in closing costs than you’d earn in proceeds should you decide to sell after a year or two. Also, you might owe capital gains tax if you sell a home you’ve owned for less than two years. On the other hand, for people who aren’t sure they’ll stay in one place for more than a few years, such as people who just want to try out a new neighborhood or students, renting a house makes more sense than buying.
Personalization and Customization
One of the most significant differences to consider between renting vs. buying a home is the ability to make the place your own. When you buy, you can do anything – from complete kitchen renovations to upgrading appliances. But renters, in many cases, are limited in terms of changes. Many renters are only allowed to paint but must have the place returned to its original condition and color scheme when moving out. So, if you have a strong sense or desire to customize your place, then you should consider buying a home.
Call the Experts and Learn More!
Ultimately, choosing between buying and renting a house is a personal choice. And if you haven’t determined which is best, it’s wise to speak to a skilled real estate agent. Our agents are readily available to help you weigh your options and make an informed decision! Call us today!
