Does it make more sense to rent or buy, this is a question many have asked. As with anything there are many prevailing opinions on the subject. As a real estate agent I see both sides of it and as a consumer I have been on both sides of it. There is not going to be one right answer that fits every person but I will cover a few common things that may help you decide. The key is to think of things in the long term or big picture.
To start with you want to consider your individual situation.
What are your plans long term, do you plan on staying in the city or area you are living/moving to? If the plan is to stay long term than I believe it makes sense to put down some roots and buy a house. I have many clients that move in from out of town and want to rent for a year before buying. This is a logical step in the process, you get to try before you buy in a sense. Many people also rent because they can't qualify for a mortgage due to credit score or job situation.
What are your plans long term, do you plan on staying in the city or area you are living/moving to? If the plan is to stay long term than I believe it makes sense to put down some roots and buy a house. I have many clients that move in from out of town and want to rent for a year before buying. This is a logical step in the process, you get to try before you buy in a sense. Many people also rent because they can't qualify for a mortgage due to credit score or job situation.
Fixed mortgage rates do not go up, rent prices do.
While there is nothing wrong with renting long term, the reality is that you have very little stability or control of the situation. With a mortgage your payment is fixed every month (assuming you got a fixed rate mortgage). If you are a long term renter your payment will almost certainly go up with on an annual or semiannual basis. This could be a small increase or if you live in a booming city like San Antonio, Texas than I have seen $50-100 increases annually. Rent works off the age old supply and demand model, the shorter the supply the more money landlords can demand. Unlike renting with a mortgage you are unaffected by the supply demand model unless you are buying or selling.
While there is nothing wrong with renting long term, the reality is that you have very little stability or control of the situation. With a mortgage your payment is fixed every month (assuming you got a fixed rate mortgage). If you are a long term renter your payment will almost certainly go up with on an annual or semiannual basis. This could be a small increase or if you live in a booming city like San Antonio, Texas than I have seen $50-100 increases annually. Rent works off the age old supply and demand model, the shorter the supply the more money landlords can demand. Unlike renting with a mortgage you are unaffected by the supply demand model unless you are buying or selling.
Renting has no return on investment.
Again long term renting does not build any equity while long term home ownership does. The standard mortgage is either 15 or 30 years depending. This means that at the end of that term you own the home free and clear. If you rent for 15 or 30 years you have nothing to show for it and you don't pay your rent you don't have a place to live.
Again long term renting does not build any equity while long term home ownership does. The standard mortgage is either 15 or 30 years depending. This means that at the end of that term you own the home free and clear. If you rent for 15 or 30 years you have nothing to show for it and you don't pay your rent you don't have a place to live.
While you don't have things like repairs and maintenance costs with a rental you also don't have the ability to make the house your own. All else aside, historically speaking property has always risen in value which makes it a wise investment. It may not always rise continually but it has always bounced back which means that the only way you lose is by selling it when the market is down. So look at it like an investment that you get to live in and build equity with every payment.
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