It’s an age-old question for many people looking to make an important choice: (Should I rent or buy a house)? There’s not always a right answer, but it is important to get all the information before making a final decision.
According to statistics, nearly 37 percent of people are renting, which is the highest amount since 1965. On the other hand, home sales jumped almost 19 percent from Jan. 2019 to Jan. 2020, in large part due to low mortgage rates.
As you look to rent or buy a house, make sure you speak with an experienced real estate professional who can help you determine what option works best for your needs, finances and future goals.
Here are some tips and answers as you decide between renting vs. buying a house:
What’s the financial difference between buying a house vs. renting an apartment?
Many of the reasons why house owning has been touted for years as the right decision are financial ones. Some examples include:
Investment opportunities: Simply put, a home and the land in which it sits on is an asset that will likely continue to grow over time.
Equity growth: Your equity is the difference between what you owe on your home and how much you can sell it for. The more you pay down the mortgage, the bigger your stake in the equity.
Tax benefits: Both mortgage and home equity loan interest are tax deductible. So are property taxes and some closing costs.
For the renting side, the difference may have to do with how much income you have at your disposal. Many young people decide that the extra money needed to purchase a home can be better used elsewhere. According to statistics, the monthly cost of a median home during the first quarter of 2020 was $1,584. The median monthly rent over that same period was $1,391.
What are the pros and cons of buying vs. renting a house?
There are well-reasoned arguments on both sides of the issue. The decision between buying or renting is a complex one that could have long-term effects. So let’s take a look at the (pros and cons) for each side:
Pros of buying a home: Buying is generally a good financial investment in the long term; Tax benefits and other financial boosts; Adding privacy in not having to share walls and deal with in-unit neighbors; A sense of ownership.
Cons of buying a home: High up-front costs, including closing and down payment; More expensive than renting; Maintenance and repair costs; Locked-in to same location for several years.
Pros of renting: More appealing for those looking for short-term commitment; Repair and maintenance costs covered in rent; Lower overall costs; Flexibility.
Cons of renting: No tax benefits; No chance to build equity in property; Shared walls means lack of privacy; Potential rent increases.
Does where I live affect renting vs. buying a house?
Location does play a role in many housing decisions. The (benefits of buying a house) are increased if you live in a place where the job market is strong, schools are highly rated, and amenities abound – your property value will rise. On the other hand, some markets are so expensive, it is cost-prohibitive to buy a house – renting will be a better short-term financial decision.
There are several places across the U.S., including a couple of counties in Georgia, where buying a house is a better investment. Other places, like the very expensive Bay Area and New York City, offer better value to renters than buyers.
Will I get financial benefits for buying a house?
There are several state-specific programs, including in Georgia, that make things a little easier for those without experience in buying a home:
Georgia Dream program: This collection of mortgage offerings is designed to help those with low or moderate incomes achieve homeownership. You will only need a 3.5 percent down payment and a solid credit score to qualify. But the program is limited to certain counties within the state.
Georgia PEN: This loan is available to first-time home buyers who qualify as “protectors, educators and nurses” and are applying for a mortgage. There are no monthly payments or interest with this type of mortgage and they come with money to put toward closing costs.
The rent vs. buy debate is one that will continue for years. Before you make a decision on your housing future, speak with a real estate professional who has your interests and wants in mind in order to gain additional clarity on the topic.