One of the Scariest Decisions You'll Ever Make in Your Adult Life
Deciding to buy or rent your next home can be a challenging and scary decision. I've broken down everything you'll need to consider including statistics, Ohio's rental market and all the opportunities you have to make your house a home when you buy.
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To Rent or Buy Your Next Home
So you’re at that point in your life where you need to decide if you’re going to rent or buy your next home. There are many reasons you’ve reached this point, whether you’re a recent(ish) college grad who just became a young professional, you just got a great promotion or are looking to put your money into something you actually own. Not that you’re “throwing money away” by choosing to rent, but buying has an opportunity cost, which is the profit you gain by investing. Deciding between buying a home and renting is one of the biggest financial decisions you’ll ever make. I’m going to talk you through both options and why statistics show a bias towards buying over renting.
In this article we’ll look at:
-Statistics comparing the cost to rent and buy
-Ohio’s rental market
-The bonuses of owning a home
Let’s look at the stats to begin
How buying allows you to come out with more money
I get it, buying your first home is super scary (especially if you’re young) but it’s totally worth it if you really compare the two. Let’s start by looking at the statistics so you can see where I’m coming from. According to Partners United Financial, “you’ll be able to sell your home for $55,249.15 more than you purchased it for after 5 years with a total savings of $64,826.33.”
The payments for buying a home includes principal and interest, taxes, and insurance- still falling considerably below the total spending of renting!
Ohio has one of the most expensive rental markets
Buying will save you a considerable amount of money
When comparing the month to month costs, it’s significantly cheaper to own than it is to rent. Monthly mortgage rates stay on the lower end and remain consistent because the interest rate is steady while rental prices climb higher and higher. Business Insider also did some research and determined that Ohio has one of the lowest monthly mortgage costs. Comparing renting vs buying, the monthly rent in Ohio averages $1,075 whereas monthly mortgage averages $700. In fact, in May 2016, the median rent has jumped 5.4%, making Ohio cities among some of the most expensive rental markets in the U.S.
In many cases, you’ll pay the same amount for a 1 bedroom apartment as you would a 3 bedroom home because you’re also paying for things like a gym, pool, wireless internet and so on when you rent. Not to mention, your cost of living is locked in when you buy. Have you ever lived in an apartment you loved so dearly and never thought you’d leave… until you get the letter to renew the lease and notice rent was about to increase $70 a month. (Whaaat?) The only hurdle that may keep you from buying a home is the down payment, especially as a first timer. This is where you’ll need to do your research to see if you qualify for a loan. Many people often qualify for a loan from the Federal Housing Administration, commonly referred to FHA.
Things you can do to your home that you couldn’t with a rental
Owning a house gives you the opportunity to actually make it a home
Sure, you may not have that fancy gym in your apartment to go to anymore, but how often did you really go anyway? The investment of a home will pay out in the long run. One of the best things about buying your home is the fact that at the end of the day, it’s yours to do with what you wish. If you aren’t thrilled with the grimy bathtub, replace it and add some tile to create a more modern look. You can’t do this in a rental. Don’t love that dreaded neutral color in the kitchen? Paint your walls gray with a fun accent color! In a rental, no matter how much you hate that dull color, there’s nothing you can do about it other than maybe covering it with tons of wall decor and pictures. The downside of this, however, is that many rentals require you to then patch those holes and find paint to match the rest of the walls. This causes a big burden come move out and can even cost you some or all of your deposit. Besides, every update you do in your home will certainly pay off in the end if you choose to move after 5 or 10 years.
Need I say more?
There are many factors that play into the tough decision to buy or rent your next home. Looking at Ohio, a state with one of the most expensive rentals, it seems like a no brainer. Buying your first home is a huge accomplishment and undeniably scary. Luckily there are many resources out there to help you achieve this, whether it be loans, or just a great realtor to walk you through the process.