Ask the Experts: Should I Rent or Buy?
Posted October 15th, 2012 | by The Update
Q: I’m looking into buying my first home. How do you know if it’s the right time to move from renter to homeowner? Should I rent or buy?
A: Now is a great time for renters to look into purchasing a home because interest rates are at historic lows and the rental market is continuing to climb. A monthly mortgage is often cheaper than a monthly rent payment. Also, property prices are just beginning to rise. By purchasing now, you’ll get a great value that may be more expensive next year.
Those dreaming of homeownership can consider these benefits:
- Build equity and enjoy a return on investment
- Gain tax advantages through interest deductions
- Make improvements to raise property values
- Enjoy stability with a fixed-rate mortgage payment
- Analyze monthly costs. In some cases, renting may be cheaper than buying. For example, renting often requires a smaller monthly cash outflow than a combined mortgage payment that includes principal and interest, insurance and taxes and, possibly, mortgage insurance. As a result, renting may free up your cash flow and allow you to save.
- Many prospective buyers are pleased to learn that it may make more sense to buy. With tax benefits you may realize from deducting mortgage interest and loan closing costs and equity estimates, the monthly costs for buying may look very much like a typical rent payment.
Should I Rent or Buy?