Renting an apartment or buying a home is a major decision. While the conventional wisdom for years and years was to buy a home as soon as possible, in the modern economy, there are many times when renting an apartment makes more sense than buying a home. Here are some factors that you should consider when deciding between renting and buying a home.
How Long Are You Going to Live There?
While not everyone may know the answer to this question, there are some situations where you know exactly how long you are going to live in an area, such as a temporary job or for school. In these situations, figuring out whether or not you should buy a home usually comes to how much you need to put towards a down payment. If you do not plan to be in an area for very long, typically you will not recoup the initial down payment on a home.
How Old Are You?
This might seem like an odd question, but consider that buying a home ties you down to one area. If you are young and just starting out in your career, you may not know exactly where you will settle down. Say, for instance, that you have always dreamed of moving to New York City and your dream job opens up, or perhaps you are more of a west coast person and find a promising start-up in San Francisco. Young professionals just getting started may want to reconsider buying a home, particularly if they want to consider job offers from other job markets. Selling a home might become necessary if you have to move to get that dream job.
Buying a Home is an Investment
The one benefit of buying a home versus renting an apartment is that you put equity into your property. In the past, paying off your mortgage could translate into a line of equity that you could tap into later in life. Nowadays, however, the housing market offers a lot less steady approach. The price of a home could go down instead of constantly rise, turning your potential investment into a wash.
Maintenance and Upkeep
Don’t discount the costs associated with maintaining a home. If something breaks, you as the owner must replace it. There are many instances where a property owner will help a renter with an expense that a homeowner would otherwise have to face herself (for example, if an appliance fails due to natural wear and tear). You must also consider maintaining a yard, which can add up in terms of both time and money.
The Final Numbers
In many situations, a mortgage will cost less than monthly rent. However, many buyers fail to account the other numbers that homebuyers will have to pay every month. For example, if you offer less than a 20% down payment, you may have to pay private mortgage insurance (PMI). You may also have to pay homeowner association fees, as well as interest on your mortgage loan. Be sure to crunch all the numbers before deciding whether or not buying a home is worth it.
Buying a home is a big decision, but so can finding the right apartment. If you are searching for the perfect apartment, consider using our apartment finder. The new Greystar website allows you to explore neighborhoods and compare apartments to help you find the best place to live.