Between down payments and closing costs, buying a home is a big financial commitment that may seem out of reach for those who ultimately choose to rent instead. However, in today’s market environment of rising rents, the difference in cost between renting and owning is actually narrowing, making this a favorable time to buy a home in most U.S. cities.
According to a recent national index from Florida Atlantic University and Florida International University faculty, the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, 15 of the 23 cities covered are solidly in buy territory, while another five are only marginally in rent territory.
Want to know if buying is a better than renting for you? Ask yourself the following questions:
How stable is my employment situation? Lenders will take the length of time you’ve spent at your current job into consideration, so if you’ve jumped around a lot or just started a new position, that may work against you.
Are you ready to settle down for awhile? Buying a home is an excellent long-term investment, not usually a quick flip. So if you’re still testing out different cities or interested in seeing the world, renting may be a better option.
What shape is your credit in? Your credit score weighs heavily in securing a favorable mortgage loan. If yours is not in the best shape, it may be better to rent while you work at building a better credit profile.
What’s your true financial picture? While your salary may seem more than sufficient to make your projected mortgage payments, keep in mind that homeownership involves many different costs, from property taxes to repairs. So run the numbers carefully before deciding to buy.
The best way to decide whether to rent or buy is to consult a real estate professional in your area. If you’d like more real estate information, please contact me.