Tuesday, January 29, 2019

Rent vs Own

Whether to rent or buy your home is a serious question. There is no correct answer. It depends on your financial situation. In many cases, renting can be the better decision. 

Sometimes, renting can be less expensive than owning the same house. Take into consideration the total cost of ownership, which can include mortgage insurance (if you don't put 20 percent down), insurance, property taxes, maintenance and repairs. 



Some other good advice from Schwab:

  • Don’t buy a home primarily as an investment. Even if you live in an area where prices typically have appreciated, you can’t be sure that will continue. If financial return is the primary consideration, other types of investments, such as stocks or bonds, might be better for you. Owning a home is as much a personal investment as a financial one. Before you commit, assess your job stability and desire to stay in a particular location. As a rule of thumb, unless you plan to own a property for at least five-seven years, buying may not work in your favor from a financial perspective.

  • Run the numbers. Whether it’s better to rent or buy depends on a lot of different factors—rent and home price appreciation rates where you live, how long you plan to stay in your new home and your tax bracket are some examples. There are a number of online resources and calculators that can help you plan for and figure out the overall costs of renting vs. buying.

  • Choose a house that fits your budget. If it will be a stretch from day one to make monthly mortgage payments—and don’t forget property taxes, insurance, maintenance, and repairs—home ownership could become a real headache in the event of a job loss or financial setback. Look for a house that fits comfortably within your budget, or consider renting in your desired neighborhood instead.

  • Plan to put down at least 20%. If you’re saving to buy a house, you should aim to save at least 20% of the purchase price. If your down payment is less than 20%, your lender will probably require you to carry private mortgage insurance (PMI). That means you’ll pay monthly PMI premiums in addition to your mortgage payments until your loan-to-value ratio reaches 80%. In general, the higher your down payment, the easier it will be to qualify for a mortgage loan and negotiate the lowest rate.
Here's a good article from Chase: 

The advantages of buying vs. renting

This video is also a good explaination.



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