If you are considering a change in your living arrangements in Queens NY, the recent news about lower interest rates have probably caught your attention.
The mortgage rates in the current market may mean that buying a home is a more economical option than renting. But that is only one aspect to consider when purchasing a home.
Both purchasing and renting offer advantages and disadvantages. Listing pros and cons is a wise way to weigh your options and help you choose what is best for you and your family.
Ownership:
Advantages to owning your own home starts with the sense of permanence and security it provides for your family. Ownership provides a fixed payment if you have a fixed-rate mortgage as well as the possibility to get a tax deduction on your home mortgage interest.
As home prices go up, equity is built allowing for potential upgrades or garnering a profit when sold. Purchasing a home allows you to own a piece of real estate that can be sold or rented in the future.
Additionally, when interest rates are low (currently as low as 3% for a 30-year mortgage), it may be more cost effective to buy instead of rent.
Owning a home has disadvantages as well. In most cases, the initial purchase of a home requires some upfront funds for a down payment and closing. The cost of repairs and maintenance rests solely on the owner’s shoulders.
Unexpected repairs can arise that create financial strain (leaking roof, heating/cooling system failures, etc.). Ownership reduces the flexibility to relocate or upgrade quickly. In some cases, home values may decrease depending on the area.
Renting:
But that is only half of the picture when considering purchasing a home versus renting one.
Consider the advantages of being a tenant instead of an owner. Renting allows for greater flexibility whether you’re moving across town or across country.
Rental requires less upfront commitment financially. There is no responsibility for upkeep and maintenance of the apartment as this is the landlord’s responsibility. In some upscale locations, such as in Manhattan NYC, it is more economical to rent than to own.
Of course, there are disadvantages to renting as well. The landlord has the prerogative to increase rent year after year.
Instead of paying a mortgage on your own home, you are paying your landlord’s mortgage.
Since you do not own your rental, stability is lacking. Your landlord may decide to sell the house which would result in your need to find a new home quickly. Though the repairs are the landlord’s responsibility, some are non-responsive or slow to respond to needed repairs or maintenance.
Buy vs Rent: Weighing Your Options
Before wading in the waters of homeownership, here are some thought-provoking questions to consider:
- How long am I planning on staying in my next home?
- Can I take on the responsibilities of homeownership: mortgage commitment, maintenance, and unexpected repairs?
- Do I see myself changing careers in less than 5 years? Could this change in career entail a move?
- Would I rather my monthly payment go towards my own mortgage or that of others?
- Am I financially stable?
- Is my career sufficiently stable?
- Can I afford a down payment?
Buying a home is a major decision that requires planning, financial strategizing, and cash resources.
If you’d like to talk through some of these questions and explore the homeownership option, contact us!
We have the resources to help you make the best decision for your situation. We can also provide you with recommendations for trusted mortgage brokers who will gladly help you investigate your financial options.
Photo source: Pixabay
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