Are you looking to purchase your first home, or downgrade to something smaller? Are you wondering if a buy or rent home situation is right for you?
Moving can be an exciting time. You'll have the opportunity to declutter, refurnish your new life, and start over. Yet a new place is a big investment, and you'll want to be sure that you're making a wise decision.
What are the pros and cons of renting and buying, and what is the right decision for you?
Let's take a look.
Pros of Buying
If you've got some money saved or if you've made a lot of money on a recent home sale, many folks will advise you to buy a home.
In many areas, the cost of renting a home each month is about the same as it is to make regular mortgage payments. While you're making those payments, however, you'll also be building up equity in your home. This is the difference between what you owe on your mortgage and how much your home is worth.
If you pay more on your mortgage or refinance to a shorter-term loan, you can build equity in your home even more. This provides you with a wonderful asset, provided that the market continues to climb. It's one of the reasons why many people will scrimp and save to get a downpayment.
Couples with children are particularly interested in buying homes because they are looking for the stability of staying in a particular neighborhood for decades. If there is a good school district and job growth, they know there will be the amenities they will need. These could include parks, transportation, and recreation for people of all ages.
These days, many individuals are purchasing homes in the suburbs of mid-sized cities, such as Charlotte, because the areas are showing tremendous growth. Many major companies are moving to these neighborhoods and bringing new residents with them.
In addition, the pandemic saw an increase in the number of remote workers. These folks are attracted to the lower cost of living as well as the amenities of mid-sized urban neighborhoods.
Cons of Buying
While buying a home offers a number of advantages that make folks willing to invest, the cost can often be a drawback. Your home buying calculator will include more than just the downpayment and monthly mortgage payments.
The cost of hiring a realtor, getting homeowners insurance, and lawyer fees will all factor into your home purchase. You'll also want to think about all of the paperwork you'll be responsible for throughout the home buying process. In addition to this, you'll want to consider home repairs.
When folks are renting, the property management company can often be called on to make small fixes. For example, if you have a leaky faucet or a broken circuit breaker, all you'll need to do is make a call to your landlord. The repair will often come at no cost to you except for a tip.
As a homebuyer, however, you'll need to hire a reputable handyman or make the repair yourself. And not repairing things could come at a high cost in the form of further structural damage.
In many areas, purchasing a home is a fairly safe bet. You can know that you'll be getting your money back through equity as home prices continue to rise. However, you also run the risk of losing money if prices drop.
In addition, purchasing a home is usually a long-term commitment. When you decide to buy, you're generally committed to staying in a home for ten years or more. If you're not sure if you want to remain in a certain area for an extended period of time, buying a home may not be the wisest decision.
Pros of Renting
These days, we are witnessing somewhat of a "sprawl" as folks from larger urban areas are settling into mid-sized locations. In these cases, renting may be a good option. You'll get a chance to try out living in different neighborhoods before you make the commitment of a home purchase.
The mobility of renting can make it a great option for young professionals and families. However, it's also a nice option for retirees.
Many empty-nesters, for example, like to travel or enjoy the experience of not being tied down to a particular neighborhood. And some can benefit from the amenities offered by rental properties.
In today's market, rental properties include so much more than just a place to eat and sleep. Many have gyms on the premises, 24-hour security, and even pools and clubhouses. If you're looking for a living experience that will give you a new lifestyle, renting might be for you.
There are minimal upfront costs and paperwork associated with renting. While you will probably need to make a security deposit, it won't be near the cost of a downpayment on a home.
Renting means that you don't have to worry about the price of homes in a fluctuating market. You will have made less of an investment in the home itself. In addition, most home repairs won't be your responsibility.
If you plan on purchasing a home in the future, renting can help you to build up good credit. You also won't need to worry about property tax bills.
Cons of Renting
Renting a home, however, also has its downsides. The reason why many folks choose not to rent long-term is that they will be spending money every month that they won't be getting back. When you purchase a home, you are counting on getting your investment back and then some when it's time to sell.
In addition, renting means you'll be limited in your ability to make the space your own. You may not, for example, be allowed to renovate the kitchen or put in a new bathroom floor. You can decorate within reason, but know that you aren't going to be able to play interior designer in the hopes that your house will gain value.
In some cases, your landlord could also decide to sell. Renting isn't permanent, and you may be getting up and moving more than you'd like to.
In addition, you may be missing out on some tax breaks as a renter. You can claim a home you own as a dependent on your tax forms. You can deduct both your mortgage interest and property tax payments.
Home improvements can also qualify as tax deductions. As a renter, you're on your own for any improvements you make, and you probably won't be getting any return on your investment.
If you plan on moving around a lot, you'll want to think about the security deposit you'll need to make on each new home, as well as your moving costs. These can add up. If you plan on staying in a particular area for an extended period of time, the investment in purchasing a home may be worth it.
Finding the Right Home
There is so much to think about when looking for the right home. Whether buying or renting, you'll want to know that you're finding a place that's convenient to your job. You'll also want to inquire about crime rates.
It's also important to have access to the right amenities. For example, if you don't have a car, you'll need to find out about the busses, trollies, or cab services that are close by. It's also important to have grocery and drug stores that are convenient.
If you're looking for an urban lifestyle, find out about the shopping, art life, or sports events in the area. If you're searching for a quieter, more suburban feel, find out about the schools and local community groups.
If you're planning on buying, it's important to look for a home in an area where prices are likely to rise in the future. Is there a lot of job growth? Are the schools highly rated?
If your goal is to rent, you'll want to think about the benefits the area can offer. Will you get a good feel for the neighborhood? How does the price compare to that of other rental units with similar amenities?
Your home should be a place where you can relax and look forward to the future. With the right homework, you could be on your way to the perfect abode.
Buy or Rent Home
It can be difficult to know if a buy or rent home situation is right for you. However, once you've considered all of your options, you'll be able to move in with peace and confidence.
Don't stop getting smart about your home now. For more information on properties in the Charlotte area, contact us today.