Buy or Rent a Home? What to Consider.

There are many considerations when deciding whether to buy or rent. These factors include your current cash flow, the local markets, how long you plan to stay, interest rates and potential tax deductions, just to name a few.

But it’s not just about finances: It’s also important to consider your lifestyle when making the choice that’s best for you.

When Renting May Make Sense:

You Might Move Within Two Years

You might want to buy a home, but you’re uncertain how long you’ll stay. For instance, maybe your paychecks aren’t steady or your job security is uncertain. If so, it might make sense to hold off on buying.

You Don’t Have the Desire or Funds to Keep Up on Repairs

As a homeowner, you are committing to fixing a leaky roof, busted pipes, or a broken heat pump. CNN points out: “ Some people just don’t want the responsibility. Renters can pick up the phone and call the landlord. Landlords also tend to pick up the tab for utilities, trash pick up and landscaping.”

When Buying May Make Sense:

You Consider it an Investment

According to CNN: “Buying a home is an investment and can be a key component of building wealth. Every mortgage payment means you own more of your home, which you will get back when you sell it (hopefully at a higher price than you paid for it, but that’s not always the case).”

You Can Take Advantage of Tax Benefits

Homeowners are allowed to deduct mortgage interest and property taxes when they file tax returns each year. Zillow explains: “This significant savings from tax benefits can often make owning the same as, or cheaper than, renting.”

You Want to Lock in Your Payments

With a fixed-rate mortgage, your payments never increase. This creates budgeting stability. With renting, you’re at the mercy of your landlord.

How Much do You Need for a Down Payment?

It used to be that you needed to pay 20% up front to buy a home. Luckily, times have changed. US News and World Report states: “ The good news is a first-time buyer can purchase a home for a little as 3 percent down – and even no money down in some cases.”

However, if you do put down less than 20%, in all likelihood you’ll be required to pay private mortgage insurance. Commonly known as PMI, this coverage protects the lender if you default on your loan.

US News and World Report says the cost of PMI depends on the size of your down payment, as well as your credit score. Freddie Mac estimates the cost of PMI at $30 to $70 per month for each $100,000 borrowed.

Current Virginia Real Estate Market

According to the Richmond Times-Dispatch: “ Virginia’s residential real estate market has remained strong in 2017.”

The Times-Dispatch goes on to say that year-to-date sales volume through November 2017 rose 8.8 percent compared with the same period of 2016. Transactions rose by 3.9 percent, from 8,648 in November 2016 to 8,982 in November 2017.

Additionally, the average number of days on the market in November 2017 declined markedly by 12.7 percent to 62 days, compared with 71 days in November 2016.

Zillow predicts home values will rise at a rate of 3.1% in 2018.

Conclusion

If you’re on the fence on whether to rent or buy, it makes sense to talk to someone who not only understand the ins and outs of the loan process, but also has a firm grasp on the market you’re considering.

Your best bet may be your local community bank. For example, The Bank of Southside Virginia offers several different loan products and can recommend which one might be best for your situation. Programs such as VA Loans, Home Possible Mortgages, FHA, and USDA are just a few. A community bank such as BSV will have more flexibility to work with you and provide a more personal level of service.