This may be a tough decision, so here are a few tips to keep in mind when you are considering buying versus renting.
Rent vs Buy in 2021
Consider Your Stability
If you know you need to relocate again in less than 4 to 5 years, it may make the most sense to rent, because you may not accrue enough equity in your home to make it worth selling it so soon. On the other hand, if you foresee staying in one place for more than 4 to 5 years, home ownership is advantageous.
One of the main benefits of buying a home is that you will build equity in your home as home values increase from year to year. Along with that, your mortgage payment (principal and interest) stays the same over the life of a fixed rate mortgage. There are tax benefits too for home ownership, including deductions for mortgage loan interest and for a portion of your property taxes. There are deductions for home office spaces as well. Buying a home is attractive for the stability it provides, the growth on investment, and generally it will be a bigger space than an apartment, plus your own outdoor space of a private yard. Home dwellers typically experience more privacy than apartment dwellers, with no shared walls with noisy neighbors. And, unlike renting, owning your own home allows you the freedom to make upgrades according to your style and preferences, and you will be investing in your own property. In the long run, home ownership saves you money, when you stop to calculate the amount of rent you would pay over a ten-year period versus investing the same amount into your own property. Put another way, you invest money when you are paying your own mortgage and you lose money when you pay someone else’s mortgage. Lastly, a huge draw for buyers is the low interest rates for mortgage loans, a hard-to-pass opportunity for getting a low interest rate locked in now.
Renting will give you the flexibility of a year-to-year lease, making it much easier to pick up and leave. Some leases include utilities, and others do not. Take the time to do the math, so you know what you are paying for rent versus what a mortgage payment would cost per square foot. As a renter, most maintenance and repairs are the responsibility of the landlord or rental property management, which may be a cost savings for you. Remember that when renting, your landlord is also trying to save money by getting things to last as long as possible and not investing in upper end appliances. Renters often need to give up personalizing their space with upgrades and their preferred fixtures. In addition, rents can increase from year to year, so check the terms of your lease carefully. If flexibility is your bottom line, and you do not intend to stick around for a long time, renting may be your best option even if there are no cost savings.