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Renting vs. Buying a House: Which Is Better?
It’s a big question with no easy answer: Should you keep renting, or is it time to think about buying a home? There are several factors that must be considered. Both options have their own set of advantages and disadvantages, and the choice ultimately depends on an individual's financial situation, lifestyle, and long-term goals.
One of the biggest factors to consider when deciding between renting and buying a home is affordability. Renting can be more affordable in the short-term as renters don't need to worry about making a down payment or paying for closing costs. Additionally, renters don't have to worry about paying for maintenance and repairs on the property.
Owning a home can be more affordable in the long-term, as mortgage payments can be lower than rent payments over time. Homeowners also have the benefit of building equity, which can be a valuable asset in the future. Assess your financial goals and make sure your budget is in line before making such a big decision. Check out this 2-minute video on “Getting a Mortgage”.
What about property taxes?
When renting, you don’t have to pay property taxes and your renter’s insurance should be a lot lower than homeowner’s insurance.
You also must consider the amount of property taxes when buying a home. In most cases, along with homeowner’s insurance, property taxes are lumped into your monthly payment. So, where you choose to live could increase your monthly payment significantly. Find out what rates are in your location with this property tax calculator.
Risks and Benefits:
Both renting and buying a home come with their own set of risks and benefits. As a renter, you don't have the ability to build equity in the property, and you may face rent increases or eviction if the landlord decides to sell the property.
When buying a home, you have the benefit of building equity and potentially seeing a return on your investment when you decide to sell the property. However, owning a home also comes with the risk of potential property value decreases, the possibility of unemployment, or unexpected maintenance and repair costs. A home warranty can lessen the impact of these situations. Ask your realtor for more details.
Stability and Security:
Owning a home provides a sense of stability and security. When you own your own home, you have control over your living space and can make changes to it as you wish. If you are ready to shift from renter to buyer, you’ve got some legwork to do. Here’s how to prepare for your first home.
If you long to live elsewhere, lack job security, are not ready to stay in place for at least three years minimum, renting may make more sense for you right now.
The decision to buy a house or rent is one of the biggest considerations you’ll make in your life, and an important one at that! Make sure you do your research and have a good sense of budgeting. And, if you ever need advice or are looking to take the first steps on buying a home, share a comment below, visit u1cu.org/mortgage or give us a call at 800-762-9555 ext. 424.
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