How to choose between buying and renting: A guide

Trying to work out whether to buy or rent a home? Here’s a quick guide to help you make up your mind.

Many people dream of the day when they will buy their first home. Aspiring homeowners may attend open houses and scour listings for months or years before they can make that dream a reality. 

Although it’s easy to get caught up in the dream of being a homeowner, buying property isn’t the right choice for everyone. Renting offers specific advantages. Consider the factors outlined here to determine whether buying or renting is the best option for you.

Trethowans
Trethowans

Qualifying to buy

Many home loans require a significant down payment, which means you’ll need to save up thousands of dollars for the down payment and closing costs. You’ll also need to establish your debt-to-income ratio is low enough to qualify for a mortgage, which means you may have to take extra time to pay off debts before you’re approved for a mortgage. 

Having a higher down payment enables you to secure a lower interest rate, making buying a home more affordable. If you’re buying a second home, you’ll need approximately 20% of the home’s cost in cash to secure the mortgage and to keep the costs down.

Buying a second home as an investment property can be an excellent way to generate revenue, but you’ll also need to consider whether you’re ready to be a landlord. You can opt to hire a property management company to manage your rental property and deal with tenants, but that expense will reduce your potential profits. Whether you’re shopping for a rental property or a vacation home you can enjoy with your own family, Google “buying second home” to learn more about your options for securing a second mortgage from a reputable lender.

Suppose you don’t have a sufficient down payment and opt for a higher interest rate mortgage. In that case, you may struggle to make mortgage payments, which could affect your ability to enjoy recreational activities. You could also be tempted to buy a house in a different neighborhood, which could undermine your ability to enjoy your new home.

Cost

The cost of the house isn’t the only cost homeowners have. Extra expenses, such as property taxes and household maintenance, add up to thousands of dollars per year. Factor these costs into your budget when weighing the pros and cons of buying a home. If you opt to rent, your landlord is responsible for routine maintenance costs, but if you own a condo or house, you’ll need to come up with the money for emergency repairs.

Convenience

What could be more convenient than finding a furnished apartment to rent? Whether you’re looking for a studio apartment or a unit with one or two bedrooms, Googling “furnished apartments in Seattle” will lead you to multiple listings for apartments throughout the city.

You don’t need to worry about packing up fragile lamps and hauling sofas and beds in and out of a moving truck. With a furnished apartment, you pack your clothes and personal items and move right in. Furnished apartments make it easy to move quickly, which is ideal if you need to relocate on short notice. They’re also the perfect option for you if you don’t have a lot of time to shop for new furnishings or aren’t sure what type of furniture you want to buy.

Living in a furnished apartment can give you practical experience with different upholsteries and design styles, which will help you determine what type of products you want when you are ready to buy your own.

Flexibility

Perhaps you work for a company with offices worldwide and spend a lot of time traveling or expect to relocate for work. Buying is inconvenient because you may need to hire someone to manage your primary residence if you’re on the road and unable to address routine maintenance and emergency repairs. You may also have financial challenges if you have to relocate for a work transfer and can’t sell your current residence. This could prompt you to lower the price and potentially lose money when you sell your home. 

As a renter, it’s easier to relocate because you don’t have mortgage payments to consider. If you’re young, you may also enjoy the benefit of renting because you can live in different types of dwellings in different areas and get a sense of what you like, which will help you avoid making mistakes when you do buy your first home.

Buying and renting both offer specific benefits. It’s important to consider whether you’re ready for the financial responsibilities of being a homeowner and whether you have enough money to qualify for a mortgage. It would help if you also considered the convenience and flexibility of renting a home to determine the best option for you.