Buying vs. Renting: Are you Ready to Own a Home?

Owning a home was once the pinnacle of the American dream. While that sentiment still rings true for many, since the housing bubble burst, people have become more cautious about becoming intertwined with the real estate market, and rightfully so! It’s important to be sure that you’re financially and emotionally ready to commit to home-ownership. So how do you know if you’re ready to own a home – and is buying always better than renting?

Buying vs. Renting

Learn about the benefits of owning versus renting a home.

Buying Renting
You have the freedom to make changes or renovations as you see fit (depending on Homeowner Association rules). The landlord is responsible for all repair and maintenance costs to your rental. This could include yard work, appliance replacements, or system repairs to plumbing or heating.
Your money is going toward an investment in property rather than your landlord’s bank account. You usually aren’t responsible for any property taxes and your landlord may cover some or all utilities.
You may qualify for certain tax deductions that only come from owning a home. You have more flexibility to move with a lease than a mortgage.

Financial Situation

Check out this handy calculator from The New York Times that helps to determine if renting or buying is more cost-efficient for your situation.

If you think that the benefits of owning a home outweigh the benefits of renting, it’s time to see if your circumstances align with the responsibilities of owning.

If you don’t think you can afford to pay a down payment, closing costs, or monthly payments for the home you want right now, start preparing for the future. If you start saving now, home ownership should be attainable within a few years. AmeriChoice even offers a Home Savers program to help first time home buyers save for a down payment.Buying a home takes a large amount of money upfront and the ability to have money saved for future costs and repairs, both expected and unexpected. Does your financial situation involve a steady income and no debilitating debt on your record? All of these factors come together to help you make the final decision. Keep in mind that conventional financial advice recommends that you only spend a maximum of 28% of your pretax income on housing costs. This could include mortgages, property taxes, and homeowner’s insurance.

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Personal Situation

Owning a home isn’t just about financial stability; it’s also about personal stability. It’s generally not a good idea to purchase a home with an uncommitted partner or if you’re looking for a one-bedroom condo but are planning on having kids in a few years. Make sure you know what house, if any, fits your personal needs now and will be suitable for at least the next five years.

Geographic Situation

One of the benefits of renting is that once a lease is up, you have the flexibility to easily move. If you look at a home as an investment, then it is much easier to build positive equity if you remain in the same home for 5-7 years minimum. Owning a home may not be a wise choice if your career involves frequent moves or you are not interested in staying in that particular geographic area long-term.

There are many factors that go in to deciding if you’re ready to own a home and if buying a home is better for you than renting. Forbes contributor Bill Conerly says on the economics of home ownership, “there are too many emotional factors for a mathematical solution.” The best way to decide if you’re ready is to talk to one of our experienced Mortgage Specialists. It’s a big decision, and we’re here to help!