When is the right time to buy a home? Are there times when you’re better off renting? There’s more to consider than just the finances. Let’s take a look.
Roots versus freedom. Homeownership brings the intangible benefit of feeling established and putting down roots. We’ve all seen those pencil markings on the walls of homes where parents recorded their kids’ heights year after year. It conjures up feelings of comfort. Homeowners also are more likely to build lasting relationships with neighbors and community businesses. Apartments and neighborhoods with rental houses, on the other hand, experience frequent turnover of residents. That said, renting provides the freedom to easily move for job advancement and changing family dynamics. In financially difficult times, when the housing market is down, homeowners may feel stuck while renters are free to move on.
Crunch some numbers. Compare the demand for homes versus that for renting a house or apartment of a similar size. What are the going rental rates compared to a mortgage payment? Don’t forget: With homeownership, the cost of upkeep is on you; with a rental, it’s on the landlord.
Tax savings. Come tax season, homeowners are able to deduct mortgage interest and property taxes, a big tax savings you won’t have when renting.
Equity for you or the landlord. Another thing to consider is the equity you build up in a home over time when making mortgage payments. Rental payments only build equity for the landlord.
Use a rent-versus-buy calculator. Several sites offer online calculators to help you decide whether it’s more financially beneficial to rent or buy.