The decision to rent or buy a house in the Upper Valley can be complicated. There are several variables you need to consider before making the ultimate decision. We have some guidelines and tools to help you visualize the pros and cons of both renting and buying.
Renting may feel like a safer option because buying a home can result in unexpected costs and resale values are not increasing at a dramatic rate. But frankly, renting is often more expensive especially when renting a whole house for several years. It’s important to think about your personal situation combined with the budget facts that surround the decision to buy or rent a house.
Your Next Move – Signing a lease is a lot different then signing a purchase and sales agreement when it comes to how long you plan to stay. If you know that you only plan to live in the area for a couple years, renting is for you. But if you know you’ll be staying put for at least 5 years buying a home probably makes more sense. Especially if you can improve upon the value with a few key projects.
Initial Costs – You need a certain amount of money saved to buy a home. You don’t need to have 20% of the purchase price saved, but you do need to be able to make a down payment and cover the costs of necessary home inspections and closing costs. The same goes for renting. Typical rental agreements require the renter to pay the first month of rent, the last month of rent as well as a security deposit. For a $1,500/month rental you have to come up with $4,500 to secure the lease. Either way, you need a significant amount saved and it’s up to you to decide where that money is better spent.
Recurring Costs – When you rent your recurring costs are your rent and renters insurance. For a homeowner these costs include your mortgage, taxes, insurance and maintenance costs. You need to budget your finances so that you are confident you can cover the recurring payments required for either situation. It is important to know that rents can increase and although your mortgage payment will stay at the same level, your property taxes can increase. That being said, a broken dishwasher will cost a homeowner hundreds while a renter can simply call a landlord and not worry about the expense.
Tax Credits – A major benefit to buying a home is that you will receive tax deductions for mortgage interest. This can be a huge benefit for homeowners and the deduction will be biggest in the early years of the loan while you pay the most interest.
According to an article in Forbes, the gap between the cost of renting and the cost of owning a home is narrowing. However even as the margin gets smaller they are still reporting that it is 38% less expensive to own a home rather then rent one.
When you invest in owning your own home you have the peace of mind that every mortgage payment you pay is putting money back in your pocket. With mindful planning you can still save thousands by paying a little extra on your mortgage in the early years of the loan. By calculating your expenses and choosing a home that will meet your needs for several years you can still make money by buying a home in the Upper Valley.
If you’re still debating if you should buy or rent a house in the Upper Valley we recommend that you use the Rent vs. Own Calculator on the Title Mortgage website. This calculator will help you visualize the cost difference between renting and owning a house. If you still have questions, schedule a time to sit down with one of our loan officers to discuss current interest rates and get pre-qualified for a home loan.