There’s a lot to consider when it comes to renting a place to live or buying a home. Homeownership may be in your dreams, but not in your budget. Then maybe renting really is more affordable than buying at this time. If you’re making the big decision to buy or rent your next home, consider these factors.
When it may make sense to rent
If you’re carrying a heavy debt load like student loans or outstanding medical bills, it may be harder to qualify for a mortgage, so it might make sense to keep renting. Take this time to pay down your debt and start saving for a down payment on a future home.
Another reason to keep renting could be uncertainty around where you want to live or work. If you or your spouse are thinking about changing jobs or moving to a new area, renting may give you the flexibility you need until you know how much your income will change or which neighborhood you’d like to call home.
If area home prices are out of your price range, renting could place you in or near your desired community without busting your budget.
Future retirement plans may also play a role in your decision to rent. If you’re planning to downsize, it’s not uncommon for retirees to rent. This way if something goes wrong, it’s a quick call to a landlord or maintenance department to fix a leaky pipe, instead of making the repair yourself or paying a plumber. Plus, downsizing could lower your monthly bills and simplify your lifestyle.
Benefits of buying a home
In the long-term, buying is generally more advantageous than renting. In many areas, the monthly cost of homeownership is less than rent. You can use a rent or buy calculator to compare the costs of buying a home against renting a place to see which option will work best for you.
If you’re ready to make a long-term investment in your future, consider homeownership. In many markets, especially areas near big cities, home prices are rising. What you buy today could be worth quite a bit more in the next few years. If you haven’t owned a home before you may be eligible for mortgage loans created for first-time homebuyers. You could qualify for help meeting down payment requirements and for funds to cover closing costs.
Owning a home lets you build equity to generate wealth. Later, if you need to tap the equity in your home to meet the needs of a growing family or to set up a creative outdoor space, for instance, you may qualify for a home equity line of credit (HELOC) to cover renovation costs. It all comes back to the flexibility of owning a home.
Whether you rent or buy a house, make sure your home fits your life and your budget. If you need help reviewing your finances before you make a decision, call your local branch to make an appointment.
The advice provided is for informational purposes only. Contact a financial advisor for additional guidance.