An ATTOM Data Solutions for 2020 shows that it is more affordable to own a three-bedroom house at a median price than renting one in about two-thirds of the United States. Although median home prices increased rapidly than the average wages and average rent, being a homeowner was more affordable in more than half of counties in 2019. More people are moving into the suburbs because of the pandemic, causing increased home prices and slack in rents across the country. Besides the price tag, deciding whether to rent or buy depends on other factors like the amount of time the person intends to stay in the home.
Do You Intend On Staying In The Home For A Minimum Of 5 Years?
It takes many years to pay off a home regardless of the mortgage payments the person pays. The costs of owning a home are high, so it is better to rent if they are not planning on staying for a minimum of five years. A homeowner has to take care of regular homeownership expenses and the upfront costs.
The closing expenses can amount to 5% of the selling price. Other fees include premiums for home insurance, property taxes, and maintenance costs which can be approximately $3000. All these vary based on the location.
Can You Handle the Finances?
Taking on a mortgage is a significant financial move, so it is best to think carefully before taking a step to be a homeowner, especially in this current economic situation following the pandemic. Although individual lenders give up to 3% or lower down payments, it is better to go with a higher down payment. When a home buyer pays more money upfront, they are left with smaller monthly payments.
Regardless of whether an individual buys or rents, their home-based expenses should not consume over a third of their monthly income. To avoid getting into serious financial difficulties, it is best to enough money to take care of living costs for about three to six months before owning a house to pay for unexpected repairs and maintenance.
While owning a house is a significant achievement that offers living security, renting offers the flexibility takes off the pressure, giving room to make the best decision. Saving money is a smart move for renters and home buyers.