In an increasingly expensive world, most of us are looking for the most cost-effective ways to get by. Many people are unsure if its more economical to buy or rent a home. Unfortunately, there isn’t a blanket answer for this question. But, there are some key things to consider that can help you determine if your financial situation is better suited to one of these options. Read on in this week’s blog from Nickel City Funding to learn more about buying vs. renting in North Tonawanda, Hamburg, Amherst, West Seneca, and Lancaster, NY. Contact us for a quote today.
Mortgage Payments vs. Monthly Rent
Most people don’t even consider purchasing a home until they feel at least somewhat well-established financially. That’s because purchasing a home using financing is a long-term commitment, while renting a place rarely requires a commitment longer than a year. Many clients believe that monthly mortgage payments necessarily are more expensive than rent, but that’s not necessarily true. Mortgages payments are often less expensive than rent might be for a place of the same size.
Despite the longer time commitment that comes with buying a home, there is a huge payoff at the end: clients own their homes. Homes typically increase in value over time, which means if homeowners sell their homes at the right time, they can make a large profit, in many cases.
Other Monthly Costs
While rent may cost more than a monthly mortgage payment, having a landlord has its benefits. Landlords are typically responsible for ensuring that the homes they rent are in good repair. Renters aren’t typically responsible for making any repairs to their homes or property. Sometimes, landlords also cover the cost of certain utilities, such as water or trash and sewer. Homeowners, on the other hand, are responsible for additional expenses beyond just their monthly mortgage payments. They will cover the cost of home repairs and upkeep, as well as homeowners’ insurance and possibly mortgage insurance.
When you sign a lease to rent a home, you may need to put down a deposit, usually valued at one or two months’ rent. When you move out, you get that deposit back, less the cost of any repairs. When you buy a home, you’ll have up-front costs as well, usually much more expensive than a rental deposit. Most conventional loans require a down payment of at least 20%, although there are some nonconventional loans with down payment requirements from 0-10%. Additionally, homebuyers will pay for closing costs when they close their mortgages, which usually cost a few thousand dollars.
Determine What’s Right for You
Like most things in life, there will never be an exactly perfect time to buy a home. You’ll need to consider how buying vs. renting would fit in your life. Consider the up-front costs, monthly costs, and time commitment associated with both options and think about how each would impact your life and finances. The mortgage professionals at Nickel City Funding serve clients in North Tonawanda, Hamburg, Amherst, West Seneca, and Lancaster, NY. We offer free quotes and consultations, so contact us for guidance today.