Should I Continue To Rent Or Buy A Home?
Should I continue to rent or buy a home? This is one of the most FAQs from home buyers.
There are some real estate agents out there who will tell every potential home buyer that buying a home is the best idea, which is not the case. These agents are generally not looking out for the buyers best interest but for the best interest of their bank accounts.
Most people who rent a place start to ask themselves whether they should continue to rent or buy a home when it is time to renew a lease on their place. Before signing a new lease for the place you rent, make sure you take the time to consider whether buying a home is right for you or whether you should continue to rent.
Below are 8 questions to ask yourself to determine whether you should continue to rent or if buying a home is a better choice. Read on to find out what these questions are and some things you should keep in mind when determining whether you should continue to rent or buy a home.
Are You Able To Get A Mortgage?
One of the first steps to buying a home is getting pre-approved for a mortgage. It’s important to understand, first and foremost, that there is a difference between a pre-approval and a pre-qualification.
A pre-qualification is a very brief overview of a potential buyers credentials such as income, job stability, and credit scores, which are normally not verified with documentation. A pre-approval is a more detailed investigation of a potential buyers credentials. A pre-approval will require a buyer to supply a mortgage lender important documents such as tax returns and pay stubs.
A very important question to ask yourself when determining whether to continue to rent or buy a home is whether or not you’re able to get a mortgage. Obviously if you’re unable to obtain a mortgage due to poor credit scores or not enough income, the decision to continue to rent is easy.
If you’re able to obtain a mortgage, it’s also very important to investigate what type of home you will be able to afford based on how much you can afford. If a buyer is able to get a mortgage for $100,000, it’s critical they determine that the homes for sale for $100,000 or less are suitable and acceptable to their expectations.
Potential home buyers who are currently renting are usually confused by the mortgage process and where to start. If you’re thinking about buying a home instead of renting, be sure to know what some of the most common mortgage questions are. Having an understanding of the top FAQs about mortgages is important.
Do You Plan On Staying Put For A While?
Buying a home is an investment. It’s important to understand that it is not only an investment, but a long term one. Another important question to ask when determining whether to continue renting or to buy a home is whether you plan on staying put for a while.
If you’re not sure whether you will be staying in the same city or area for several years, buying a home may not be the best choice and you probably should continue to rent. The longer you plan on staying in a home, the better, primarily due to the costs that are associated with selling a home.
Many first time home sellers fail to remember that there are costs associated with selling a home. Not only are there costs associated with selling a home, the first several years of payments on a mortgage are almost all interest payments. This means that the principle mortgage balance will not be much less if you were to sell a home only a year or two after buying it.
If the local real estate market remains stable or possibly even declines a bit, a homes market value usually is not going to be enough to pay off the mortgage, which can lead to a short sale.
Is Your Job Security Strong?
Most people don’t like to think about whether their job security is strong or not, however, when deciding whether to continue to rent or buy a home, it’s very important you ask yourself whether your job security is strong.
If a buyer is unsure about their job security, it’s suggested not to purchase a home. Job loss is one of the biggest reasons for foreclosures and short sales. A hardship, such as job loss, can be devastating to a homeowner.
Obviously there is no guarantee for anyone when it comes to predicting job security, but it’s important when deciding whether to rent or but, you ask yourself this difficult question.
Is Your Family Status Going To Change?
Another important thing to consider when deciding whether to rent or buy is whether your family status is going to be changing. A change in family status, whether it be a marriage or having children, can impact whether you should continue to rent or buy.
If a buyer is planning on getting married, it maybe beneficial to wait until the marriage is official so they can purchase a home together with their spouse. Not only is it important to some people to purchase a home with their spouse, but it also can impact how much a buyer can afford.
Having children can also impact whether a buyer should continue to rent or buy a home. First and foremost, having children is not free and can make a significant impact on someones financials. The additional costs associated with having children, such as medical care and supplies, can create additional financial stress.
In addition to the financial stress having children can create, it’s also important to determine which neighborhoods and schools would be acceptable. If there are certain school districts or neighborhoods that you would want to live in, can you currently afford to purchase a home in those areas? Choosing the proper neighborhood when buying a home is very important not only for quality of life, but also for future resale.
Do You Have Money Available For A Down Payment, Closing Expenses, & Other Home Buying Costs?
There are costs associated with buying a home. While there are some mortgage programs that allow buyers to buy a home with little or no money, it’s important when determining whether to buy or continue renting you make sure you analyze whether you have money available for home buying expenses.
When buying a home there are costs in addition to the down payment. It’s important to understand what the additional costs to buying a home are. Below are some of the other costs associated with buying a home.
- Mortgage Application Fee
- Bank Appraisal Fee
- Real Estate Attorney Fee
- Homeowners Insurance
- Various Home Inspection Costs
To fully understand how much money these costs and fees are, it’s important to discuss the home buying process with a top real estate agent. A top real estate agent should be able to inform a buyer on the approximate money that will be needed to buy a home which can help determine whether continuing to rent is the best option or not.
Do You Have Money Available For Repairs & Maintenance Costs?
Owning a home can result in the need for repairs and general maintenance. Home repairs and maintenance costs money and it’s important when determining whether to continue to rent or buy, you ask yourself if you have money available should you need it.
Some of the most common repairs and maintenance costs that home buyers often forget include roof repairs, HVAC repairs, and home appliances. Failing to take into account potential repairs and maintenance costs can lead to a buyer neglecting their home.
Depending on the neglect, some homes will get to the point that they are no longer safe to be living in. For example, a homeowner who doesn’t know how to winterize their home and neglects to have their furnace tuned up and inspected can potentially be putting carbon monoxide in the air in their home, which can be fatal.
Do You Want The Responsibilities Of Owning A Home?
With home ownership comes responsibilities. When determining whether to continue to rent or buy a home, it’s important you ask yourself whether or not you want the responsibilities of home ownership or not.
Responsibilities such as lawn maintenance and snow removal are just a couple responsibilities of owning a home. Unless you’re thinking of purchasing a condo or town home that is part of a homeowners association that includes completing many of the responsibilities, you need to determine whether you want these added jobs.
Is It Cheaper To Rent Or Own A Home?
It is possible that buying a home may actually be cheaper than continuing to rent. It may also be possible that it is cheaper to continue to rent. It’s extremely important when deciding which is better, you analyze the costs of renting and the costs of owning a home.
Below are many of the costs associated with owning a home as well as the costs associated with renting to help determine which is the better fit.
Costs Associated With Renting
- Monthly Rent
- Renters Insurance
- Security Deposit
- Pet Deposit
- Utility Costs
Costs Associated With Owning A Home
- Monthly Mortgage
- City/Town/Village/County Taxes
- Homeowners Insurance
- Utility Costs
- Refuse Costs
- Maintenance Costs
The initial cost of buying a home is much higher than continuing to rent. The down payment alone normally makes buying a home more expensive, however the actual cost of owning a home may very well be less than renting.
In many areas, rent amounts are increasing at staggering percentages. Buyers who have fixed rate mortgages will pay approximately the same amount per month over the life of a loan while renters may find themselves paying several hundred dollars more in a short 3 or 4 year span.
Deciding whether to continue renting or to buy a home is a big decision. It is not a decision that should be made without analyzing both options in detail.
It’s important to understand that buying a home is not for everyone. If you’re told that you should absolutely buy a home from a real estate agent, you need to be cautious whether they are concerned about your best interests or their own.
If you’re thinking about buying a home instead of renting, make sure you know how to interview Realtors when buying a home. Having an honest and ethical buyers agent who is looking out for your best interests can help reduce the chances you make the wrong decision.
Other Resources For Potential Home Buyers
- When Should Renters Consider Home Ownership via Teresa Cowart
- Renting Or Buying – Which Is Best For You? via Wendy Weir
- PROs and CONs of Renting Versus Buying A Home via Great Colorado Homes
- To Buy Or To Rent – That Is The Question via Frederick Real Estate Online
- Tips For Millennial Home Buyers via Maximum Real Estate Exposure
- First Time Home Buyer Tips & Advice via Rochester’s Real Estate Blog
Are you currently renting in Rochester, NY and you’re thinking about potentially buying a home? If the answer is yes and you’re not sure whether you should continue renting or should buy a home, contact me. I can help you weigh the PROs and CONs to both renting and buying a home.
About the authors: The above article “Should I Continue To Rent Or Buy A Home?” was provided by the Keith Hiscock Sold Team (Keith & Kyle Hiscock). With over 30 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.
We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.
Visit our website at www.HiscockHomes.com.
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