For many up and coming adults, whether they are 18 years old or 35 and older, the cost of living is a very important factor that affects where you decide to live and for how long. It seems that one of the most important questions that we ask ourselves is whether it is better to rent or to own a home. At Gavish Real Estate, we see this dilemma come up frequently. Honestly, there is no better answer than the other. The reality is that there are pros and cons to each proposition and the decision ultimately comes down to what is best for you. But if you are on the fence about whether you should be renting or owning, we’re here to help you break it down.
What to consider when making this decision:
Your finances will likely determine whether renting or owning is best for you. Buying a home is a very big financial decision. Buying a home usually requires a big up-front payment that includes the down payment (3% – 20%), a mortgage (principal and interest), and closing costs.
On the other hand, renting usually requires a security deposit along with first and last month’s rent. This can be the difference between spending $4,000 with renting and upwards of $10,000 or $20,000 when buying.
How long do you plan on living in that home?
Depending on how long you plan on living in a certain location, you may not be interested in purchasing a home.
Buying a home generally creates stability and you can expect to pay off your mortgage over the next 15 or 30 years. That’s great if you’re starting a family or settling down. Alternatively, apartments are great options if you still plan on traveling a lot, moving, or aren’t sure about where your future will take you.
Are you ready to become responsible for a home and the repairs?
Renting is great because generally your landlord or management is on the hook for repairs. Owning a home means that you will now be responsible for any leaks, broken appliances, repairs, upgrades, etc. for your home. Are you willing and able to replace a broken HVAC unit?
The white-picket-fence life isn’t for everyone. While buying a home can be a part of the picture if you plan on having a family, settling into a career, and you can afford to live in your current city. On the other hand, if you don’t need the extra space that you would with a family or maybe you plan on returning to school to further your education or change careers, you may be better off with the flexibility that renting allows.
The bottom line
The bottom line is that buying a home is heavily dependent on what your life goals are. If you are uncertain about your future financial, career, and family goals or if you don’t plan on settling down anywhere any time soon, your best bet is renting. It can be more affordable and flexible in the meantime.
On the other hand, if you can afford the cost of purchasing a home, it is a great way to build equity and it can offer you and your family some much-needed stability.