Economic uncertainty and a shortage of affordable housing have drastically changed the discussion around buying a new home vs. renting. However, homeownership isn’t out of the realm of possibility — in fact, purchasing property is the more affordable option in 66% of markets.
Is it time for you to take the plunge? According to industry experts, here’s everything you should consider before becoming a homeowner.
- Owning a home provides stability by eliminating the renter-landlord relationship.
- Since houses appreciate and provide several tax benefits, they’re a solid financial investment.
- Knowing the state of the housing market is essential to getting a good deal, so you may want to rent until the market is in your favor.
- The total cost of buying a house may be higher than first-time buyers think, as it includes the down payment, homeowners insurance, closing fees, and maintenance expenses.
Why Buy a New Home vs. Renting?
Buying a house is a major milestone, as property is one of the biggest financial investments an individual will ever make. While the decision is different for everyone, people tend to buy their first home in tandem with other significant life changes:
- Getting married
- Moving for a job
- Having children
Why make the switch with other stressful changes in the mix? People assume (correctly) that owning a house provides advantages in these scenarios. However, plenty of others happily adjust their lives without taking on the burden of a mortgage.
Rather than checking off boxes about what you “should” do at your life stage, it’s essential to consider a new home vs. renting within the context of your immediate needs and future goals. For example, if you hate the idea of keeping up with maintenance, renting may be the best option. In contrast, if you’re excited about customizing your living space, you’re in a homeowner’s mindset.
One of the biggest downsides to renting is never knowing if you’ll be in the same place next year. Owners can make major decisions without input from tenants:
- Selling the property
- Raising the rent
- Not renewing a lease
In the worst scenarios, renters may have to move out of the neighborhood due to a lack of appropriate housing options. That can mean moving away from support systems, schools, and workplaces.
You may also need to downgrade from a planned community, such as Washington Township, to an older neighborhood with fewer amenities. When you own property, you can rest easy knowing you’ll be in the same residence for the foreseeable future.
Though it may seem counter-intuitive, you also gain more financial stability when buying a new home vs. renting. For one thing, owning property is helpful in retirement planning. If you can pay off your home before your planned retirement date, you won’t have to worry about mortgage payments while on a fixed income. Additionally, consistently making payments on time builds credit, allowing you to qualify for better terms when seeking vehicle or home loans.
Houses grow in value, especially in highly sought-after locations, such as Sugarcreek Township. For homeowners, that means your property will eventually be worth more than you originally paid for it. You can then access that equity through a home loan or line of credit, giving you resources to take on new projects or provide for loved ones:
- Go on a second honeymoon
- Pay for children’s or grandchildren’s educations
- Pay for weddings
- Renovate your home or build additions
Property value also plays a huge role when you’re ready to sell. If you’re debt-free and have made high-value changes to your house, you can sell it for a tidy sum. For owners looking to downsize for retirement, this allows you to purchase a lovely place with cash to spare.
Of course, the financial benefits of buying a new home vs. renting aren’t limited to equity; homeownership also provides various tax benefits. Itemizing deductions can save you thousands of dollars, leaving you with more money for retirement or living expenses. The following are the most common deductions for homebuyers:
- Private mortgage insurance payments
- Capital gains tax
- Medically necessary home improvements
- Home office use
- Mortgage interest
How Do You Know You’re Ready To Buy?
Unfortunately, being mentally ready to own a home and having the means to do so are two different things. If you’re already looking for the perfect place in Centerville, you may want to slow down and analyze a few things before getting in over your head:
- The state of the housing market
- The costs of home ownership
- The impact ownership will have on your lifestyle
Many factors affect the housing market, such as location, supply and demand, and regulations. As these factors shift, markets oscillate between a buyer’s and a seller’s market. In the former, buyers have the power; in the latter, sellers do.
When debating purchasing a new home vs. renting, it’s critical to look at the market in your area. Waiting for the market to turn in your favor gives you a better chance of finding a home in a growing neighborhood such as Bellbrook.
You must also be able to cover all the costs associated with a home:
- Down payment
- Closing fees
- Mortgage payment
- Insurance payment
- Maintenance and repairs
The higher your down payment, the better your position, as you’ll have a smaller monthly payment and may not have to maintain mortgage insurance. However, saving tens of thousands of dollars takes time, especially if you’re paying rent simultaneously. For many, a lower down payment (around 7% of the purchase price) is more feasible.
Finally, you have to decide if buying is worth potential lifestyle changes. For instance, you may need to reduce spending to meet your new financial obligations. You may also need to move to another area to find the right home.
Where Should You Look for a New Home After Renting?
Have you decided on purchasing a new home vs. renting? Oberer Homes builds homes in up-and-coming communities in Dayton, OH, and the surrounding area. You can choose a move-in ready home or collaborate with experienced builders to customize your floorplan. Learn more by calling 937-531-5505 or visiting the Oberer Homes website.
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