Have you ever wondered whether it’s better to rent or buy in today’s market? If you’re renting, you’re paying somebody else’s mortgage and you’re giving that money away every single month. Whatever you’ve invested over the timeframe is just gone. When you own your home, you’re paying yourself. Considering the values of homes are going up, buying a home is certainly worth it. Even if values decrease for a period of time, it’s usually short term and you’ve got to pay to live somewhere so it still makes sense to invest in yourself. While you’re paying down your mortgage and the values are going up, you’re seeing an increase in your equity. You may, down the line, want to use that equity to do a home remodel, or perhaps pay off that high-interest credit card debt.
While there is certainly a pro to renting such as house maintenance you’ll want to consider other factors.
What’s a ‘Pro’ to renting?
If the dishwasher breaks, the faucet leaks, or anything in the house goes wrong or does not function the same way it did when you moved in, you can easily pick up the phone and call your landlord. They come within a certain amount of time and fix it. Back to normal right?
What’s a ‘Con’ to owning?
When you own your home, you have to figure out how to take care of those repairs yourself, however, there are home warranties available, and can have any repair done at a very reduced cost. You can hire somebody outside to do it, which can be a little bit costlier when you consider the cost of labor. Or if you’re a handyman or handywoman, you can take care of it yourself with some sweat.
What’s a ‘Con’ to renting?
We’ve seen over the last two years rent increases. Many, in fact, dread a renewal of their lease or rental agreement due to the chance of a rent increase. There’s no law in Arizona that says they cannot increase your rent beyond a certain point. So that rent can continue to climb year over year depending on your lease/rental agreement. With your mortgage, you can get on a 30-year fixed mortgage payment. So even in 10 years, your mortgage payment is the same exact cost.
What’s a ‘Pro’ to owning?
You’re investing in yourself with a consistent monthly payment. Most mortgage loans are set for a specific term such as a 30-year fixed rate and you’re locked into that rate and term for the life of the loan. With home values on the rise, that’s more equity that you’re gaining or that “you’re paying yourself”. Again, after renting you have no equity. Here’s some quick math for you: If you’re paying $1800 a month, over the span of 24 months you’re losing $43,200. If you own your home, you’re going to make up that equity over that same time span and you can get a mortgage payment of around $1,800 with as little as 3% down. You can own your own home around the price range of $275,000 for $1800 a month.
Interesting thought, right? Not to mention the equity earned in that 2-year period. So, there are pros and cons to both renting and owning, however, there are a lot more pros to owning your home. If you need any assistance or guidance, we offer free consultations with our mortgage consultants who can go over options with you to make sure that it makes sense for you.