Should You Buy or Rent A Home?

If you do not want to read this entire article, then I’ll answer you right now. The answer is: well, it depends on your situation. I would be doing anyone a disservice to give blanket advice when I know nothing about you. But what I will do is point on some various facets of both.

However, I won’t re-invent the wheel. There is plenty of information already out there, like this video, that compares the two situations.

https://youtu.be/oDe7N2vCly8

So let me cover things from a different angle….

1. ‘Homeownership’ means different things to different people

For some people, owning a home is a rite of passage; similar to graduating from college and getting hired for your first professional position. It can also be a means for some people to establish themselves socially. As a homeowner, to lay a stake into the community. You carve out a particular lifestyle for your family and mold how their lives will play out during the current generation. 

For other people, homeownership is simply an option to put a roof over your head. The final decision lays not on social conventions, but mainly on economic ones. Is it cheaper to buy or rent? How much can I afford to lose if the market takes a turn for the worse? Do I forsee a relocation to another area on the horizon in the near future? For these folks, homeownership is purely optional…depending on the circumstance. For professional roof inspection and repairs contact williston roofers

And then you have some people where homeownership is almost a necessity….due to lack of available rentals in the area…or the inability to deal with or afford ongoing rent hikes.  

2. Where you live has a big impact on the decision to buy vs. rent

When I lived in North Miami Beach, I didn’t even consider buying a home. Mainly because the prices were so inflated while I was there (which was prior to the real estate bubble bursting). My rent was $900/month and 1-2 bedroom condos were selling for around $200K. The same argument that people give about rent being higher then average mortgage payments in markets with cheaper housing actually works in your favor when you live in an area were the cost of real estate is high. You will find here Why net branch companies important Reverse Mortgage Specialist notes.

Also the liquidity of your money invested in real estate varies a lot depending on where you live. I have friends who relocated away from Detroit 10 years ago and their house was on the market for over a year! Luckily for them, they did not need that money to relocate (they actually rented when they did…due to frequent relocation, they really weren’t even interested in buying another home). But still, it is no fun to pay a mortgage on a home that you are not living in or that you need to be out of. Deciding whеthеr оr nоt tо uѕе a real estate agent whеn уоu buy оr sell уоur nеxt home іѕ a question thаt уоu mіght hаvе asked уоurѕеlf іn thе past. If уоu аrе nоt sure іf іt wоuld bе beneficial tо uѕе a Real Estate Agent. You can also appoint auction bidding service providing firm who can help you to buy a dream house in a very affordable price for you. Another thing you can do is to sell your house to a real estate company like the House Buyers of America. They buy houses for cash regardless of their condition. 

In Jacksonville, FL, you can see that while the average rent is $1,152, it is still pretty comparable to what you would be paying on a mortgage for a similar property.

Compare the same statistics to Detroit…where average rent is lower, but significantly higher then what a monthly mortgage payment would be.

3. Financing Woes

Let’s assume that everyone has a great credit profile, and has no issues getting approved for a mortgage (yeah right…but let’s just pretend here 😉 ). Ultimately money is money. Sure a lawyer that works in San Francisco will command a higher salary then one working in Cincinnati (on average). But real estate in San Francisco costs 5 times as much as it does in Cincinnati. Is your salary that much higher?

Ok, so what’s my point. Well, if you are looking an an entry level, single-family home in a market and even modest homes are going for $300K; whereas elsewhere they are going for $150K…financing rules are still what they are. LTV (Loan-to-value) is still a thing and if you want to get into a $300K home, you’ll need at least $15,000 even with FHA financing.

Then there are a whole other slew of issues….like loan limits, debt-to-income ratios….and then a real honest assessment of your financial situation. Even if you can afford a $2K mortgage payment with your current salary, how long could you afford it if you lost your job….or went through a divorce? Is your career and/or personal life really stable enough to take on a mortgage of $100K (or several $100K)?

Foreclosure can be devastating…both to individuals and communities.

In conclusion

The three areas above are exactly why you need to take advice on whether or not to buy or rent a home with a grain of salt. You can’t give the same advice to people who are living paycheck to paycheck — trying to reduce their monthly expenses wherever they can; to others who have a diverse portfolio of assets and see owning a home as a package deal (and that ‘package’ could include things like area prestige, local public schools, neighborhood amenities, etc.). Similarly you can’t give the same advice to someone who lives in Brooklyn, NY vs. Morgantown, WV. The best advice that can be offered to all is to seek out real estate professionals who can partner with you to help accurately asses your needs and set realistic goals…as opposed to someone who is only looking to make as much money off of you as possible.