Renting vs. Buying

The question whether to buy or rent is a difficult decision, and there isn’t a one-size-fits-all answer. However, there are a few personal and financial factors that should be considered when making such a big decision. A few questions you should ask yourself include: Am I financially ready to take on home ownership? Am I planning on moving within the next 5 years? Is now a good time to buy a house? What am I able to afford?

You may look at rent prices and think you could afford a house for the amount you pay in rent each month. While that may be true, there are additional costs associated with homeownership aside from the monthly mortgage. As a homeowner, you are responsible for the financial cost of every repair, lawn maintenance, potential HOA fees, property taxes, and replacing broken appliances.

As a renter, you are usually just responsible for utilities and your monthly rent. You don’t have to worry about fixing a broken HVAC system, toilet, refrigerator, etc. You can just call maintenance or the landlord.

It is easy to forget the additional expenses that accompany homeownership. “Before buying, I suggest taking a brutally hard look at your spending,” states Cheryl Costa, a financial planner in Boston. “Too many people buy a house and fail to appreciate all the ancillary costs.”

In addition to thinking about what you can afford, you should also consider your current financial state. You need to examine your credit score, your debt-to-income ratio, and your savings/assets. If your credit isn’t in good shape, you are unlikely to receive favorable mortgage terms, and your interest rate will likely be higher. As a result, your mortgage payment will be higher. So, if your credit isn’t healthy, it is better to rent until you can get your score up. Similarly, if your debt-to-income ratio is high, you probably want to reduce your debt before you begin house hunting.

Moving within the next five years?

If you are planning on moving within the next five years, renting is probably your best bet. Buying a house is a commitment and isn’t a decision that should be taken lightly. According to, it takes four to five years on average for a homeowner to build up enough value in their home to justify selling a house. Furthermore, depending on the housing market, it can be more difficult to sell a house than break a lease. Sure, it may difficult to break your lease, but at least you won’t have the added stress of worrying whether your house will sell before you have to move.

Is now a good time to buy?

There is often pressure once you hit a certain age to buy a house, but you should not let that influence your home buying decision. If you rush into buying a house, there can be a lot of negative consequences. For example, you may buy a house that you can’t realistically afford, or you might buy a house that requires too many costly repairs. In addition, as aforementioned, it is best to hold off on buying a house if your life is currently transient. It will be difficult to benefit from your investment if you are not ready to settle.

It is also important that you check the housing market in your area before buying. If the housing market isn’t performing well, you may lose money if you buy a house. On the contrary, if the housing market is performing so well that there is more demand than there is supply, it may make buying a house unaffordable. The pandemic has impacted the housing market greatly. Many markets saw a huge rush in home buying. As a result, the demand was greater than the supply and home prices soared. The effects are still lingering, as inventory is still lower than pre-pandemic levels.

Like anything, there are pros and cons to both renting and buying. A few pros to owning your home include: more space, the ability to remodel, the potential equity that can come with owning your own home, and the freedom to do whatever you want in your home without criticism. A few cons include: property taxes, maintenance costs, and possible HOA fees.

Pros to renting include: no property taxes, maintenance costs, or possible HOA fees. Cons to renting include: potential lack of space, the inability to remodel, and the inability to receive a return on the money you pay for rent each month.

Owning your own home is a great investment. If you have decided that purchasing a home is the right decision for you, we at Mlend are here to help. Whether you need help with the home buying process or are wanting to apply for a loan, give us a call at 1-855-88-MLEND.

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