How To Know When It Makes More Sense To Buy Than Rent

Renting is a great short-term housing solution for millions of Americans each year. And, for those who don’t want the responsibilities of homeownership, it can also serve as a long-term lifestyle for those uninterested in buying a home. However, if you do hope to someday purchase a home, there are several reasons it is one of the best financial decisions in the long run.

Finding out when is the right time to buy a home is difficult. You’ll have to consider your current budget and future financial goals, your employment situation, and personal lifestyle preferences.

Mortgage rates through history

One of the features of home buying that is largely out of your control is the historical average mortgage interest rates. While your specific rate will be based on things like your income and credit score, as well as the type of mortgage you choose, real estate trends will also have an impact on the rate that lenders use.

Rates are, on average, lower in the last five years than they were throughout the 80s, 90s, and 00s. With rates under 4%, these levels are unprecedented in the last 3 decades. However, last year did see a slight increase to just over 4%.

What are your long and short-term plans?

Many people who are considering buying their first home are more concerned with whether it’s financially feasible than if it fits into their life and career goals. Before you start shopping for houses and contacting lenders, it’s a good idea to sit down with your family or significant other and start thinking about your timeline. Are you prepared to live in your next home for 5-7 years? This a good baseline for the amount of time you need to stay in a home to make it worth the expenses.

Are you prepared for the extra workload?

Homeownership is work. Aside from just having to mow the lawn and take out the garbage, you’ll also be responsible for repairs and maintenance that your landlord was required to do when you rented. Some repairs can be costly and require calling in a professional. Just like owning a car, homeownership has its associated upkeep expenses. However, with that added responsibility comes independence. You can paint and change your home how you see fit without worrying about losing a security deposit.