When someone is considering purchasing a home, they have two options. Either deciding to rent the home, or buy the home to fully own themselves. A house can be a hefty investment for many, so it’s important to consider all the available options when deciding how you will end up in your dream home. 

Why Rent?

A major factor that drives people to rent homes are the finances. It may be the best decision for someone to rent when they might not be able to afford certain fees, especially a down payment. When purchasing a home with a mortgage, you’re required to have a down payment for as much as 20% of the property’s value. For example, A 20% down payment on a house with a market value of $200,000 is $40,000. The average apartment rental in Manhattan was $4,419 in February 2022. Not an unfair price for being considered one of the most expensive places in the country! Those who don’t have money for a down payment are better off renting. Many young people/couples also find it most fit to rent, because they’re not sure if future plans would change and it wouldn’t make sense to buy a home they wouldn’t be staying in. Excessive debt can be another contributing factor into why people might not be able to purchase a home right away. When you purchase a home, you’re required to keep with all of the maintenance and repairs. This just means that more money than expected could be coming out of your wallet!

It’s also a lot harder for home owners to live in cities of their dreams, because the prices are just way too high. Renters get a lot more flexibility when it comes to places they can live, because of the overall lower costs associated with renting. Renters also have the ability to move whenever their lease ends. This means if someone begins to struggle with paying the rent each month, they are much more flexible to downsize and move to a location a bit more in their price range. The amount you pay in rent is also set for the entire span of the lease agreement. So if there were to be any sort of rent raises, you would have time to budget and know exactly how much you would have to be paying. 

Check out some statistics of renters in the United States (2022). 34% of current U.S. households are renters:

• 34.4% of renters are under 35.
• 38.1 of renters live alone
• 59.5% of homeowners are married couples.
• In the top 25% net worth percentile, 3.9% are renters.
• The typical U.S. renter is 39 years-old and has never been married.
• The typical renter in the U.S. has at least 4-years of college education, and earns a median annual income of around $40,000.
• The national median rent went over $2,000 in 2022.
• The most expensive states to rent in are New York, California, and Massachusetts.
• The median rent-to-income ratio for renters is 57%.
• A 2-bedroom apartment with 1.5 baths and an area between 1,000 and 1,999 square feet is considered as the typical rental.

Why Buy?

It’s common for the majority of people who buy a home to be at a point in life where they are ready to settle down. Owning a home also offers pride in ownership. You get more of a sense of stability and get the reins when it comes to changing up the look/design/space. 

Take a look into the major benefits when it comes to being a homeowner:

• You are your own boss: Each month, you will be building equity in your property when you own a home. With every payment made, you'll own a little more each time! If you put in the work to take care of your home and make any necessary improvements, you could even see the home having an increase in value over time. It’s safe to say that when you invest in a home, you ultimately invest in yourself! 
• Take care of your family: A family is of course a long term commitment, which requires a stable environment to call home. Even though renting is simply within a lot of family’s means, there are many benefits when raising a family in a household environment. You are doing a huge favor to your family as a whole by purchasing a home! 
• Build credit: When you show that you are able to repay your loans, your credit will appreciate it to say the least! By ensuring that your mortgage payments are made on time, you will benefit by building positive credit consistently. 
• Overall freedom: Contrary to renting, you  can do whatever you want with your home! Renovating can really help to increase the value of the home over time. Even if you were to sell the home eventually, you would still get to keep all of the property’s profits.

Even with all these great benefits, it’s always important to remember finances. The overall cost of owning will ultimately be a bit greater, even if the mortgage payment happens to be lower than the rent. Here are some of the different types of expenses home owners can expect to spend money on:

• Property taxes
• Trash pickup 
• Water and sewer service 
• Pest control
• Tree trimming
• Homeowners insurance
• Pool cleaning 
• Lender-required flood insurance 
• Earthquake insurance 

What to Keep in Mind

The process of getting settled into a home is an exciting time! But it also requires you to take the time to look at all the available options and reflect back to what’s ultimately best for you and your future. Happy hunting!