When it comes to renting vs. buying- How do you know if you are making the right or wrong decision? The terms “right or wrong” are actually very subjective. It all depends on your personal situation. You need to ensure that you are making the smartest decision for yourself because it’s one of the biggest financial decisions of your life! So let’s not take this lightly.
While renting can feel like you’re throwing your money away to your landlord, homeownership can also be stressful too. So which is the smarter choice? Let’s evaluate this topic together.
“The CEO of Zillow Spencer Rascoff says, “The best piece of advice for a home buyer, when thinking about whether to buy or rent, is to evaluate how long they’re going to live in the home and it also depends on the city.” -May 2016
Zillow data also shows that if you want to purchase in the Washington DC Metropolitan area, you should intend to stay in the home for at least 4 1/2 years. Insightful fact! Now Let’s look at reasons why you should rent or buy.
Reasons to Rent:
- Flexibility– Renting allows you to explore an area before making the commitment to homeownership. It gives you more time to research & discover a specific neighborhood to see yourself living in!
- Career uncertainty– Not sure about your current job situation? Maybe you’re current job may require you to move in the near future. The smarter choice might be to rent if you are uncertain about your job relocating you.
- Income uncertainty- If you expecting a pay cut or your current job varies with income,this will impact your borrowing ability as well as your ability to pay your mortgage. Having secure income makes the home buying process secure and more enjoyable!
Reasons to Buy:
- Equity- When you rent, you are paying your landlords mortgage payment & you are adding equity to his or her bank account instead of your own. (Who wants that?) When you are paying your OWN home mortgage, you are increasing your own equity!
- Tax deductions- You can deduct mortgage interest as well as your property taxes. Uncle Sam doesn’t give renters this bonus. Also, you can meet certain requirements and the IRS won’t apply capital gains tax on your profits from the resale of your home. Cha-CHING $ Another awesome tax benefit from owning a home is if you work from home. You may be eligible for deductions!
- Creative control- We all love this. There’s nothing better than being able to decorate your home as you please. You like dozens of pictures on the wall? Go right ahead! You own those walls! 🙂
Let’s face the simple fact that you are going to have to live somewhere. The percentage of income needed to afford a median priced home is almost HALF the percentage of income needed to afford median rent! So back to the big question, Renting vs Buying- Which is smarter? Buying.
If you are looking to rent or buy in the Frederick area, I would love the opportunity to help you find your dream place. It’s my job to make sure you have the best experience.