Rent vs. Buy

[Anonymous]

Hi,
Moving in a few weeks and wondering if we should rent or buy. We have no debt (since Jan 2018) and a middle FICO score of 674. Income is 120k. We have small savings of 12k..might be able to add a little more to that in the next 30 days. Credit history has A LOT of 30 day lates in 2017 (last one was Oct '17) but none in 2018...so to sum up I'm wondering if should we rent for a year and keep saving money and put more time between late payments or try to buy now. Personally I would love to not have to move again in a year but I also don't want to make a poor financial decision and am also scared we will be denied. Thanks for any advice given!!

[NC_Mtg_Loaner]

Do you plan on living in the property/area you plan to relocate to for about 2 years?

Selling can be a hassle if you have to do so in the future, sure, but if you are going to live in the same area and your lifestyle is leaning towards settling down some AND the costs of renting and buying are similar then it's generally a better investment to purchase. 

[homeloanexpert]

I have written several articles about this very topic and based on your scenario I could point out several reasons why it would be better to buy vs renting and then again, it's possible it doesn't make sense. Here are a few:

Pros of Buying a Home

1.) It’s yours and you can do with it what you want. That's a great feeling!

2.) Most likely cheaper to own than renting. National averages show a steep upwards trend due to the lack of afforable housing.

3.) You can put money in your piggy bank instead of your landlords. Why do you want to pay someone elses mortgage off?

4.) Take advantage of the possible tax benefits by deducting your interest, property taxes, and depreciation.

5.) Eventually turn this home into an investment property and so you may be the landlord and have some renter pay off your home

Cons of Buying a Home

1.) More responsibility and liability

2.) Higher maintenance costs and upkeep.

3.) Less mobile than renting, iit can be more difficult to pull up stacks and move if you job requires it

4.) Depending on your needs, in some cases it may be cheaper to rent

So, what is the answer?

There are multiple reason for and against buying or renting. When renting, you have a definitely timeframe so if you do not like the area, your neighbors, the noise, then you just need to finish out the term of you lease and move. If you buy a home and you find our later on that you don’t like the area, your neighbor, etc. you can’t just pick up and so easily. So before buying a home you will need to do your research. Check out if there are airports, schools, heavy traffic or congested roads nearby.

Drive the area during the weekend and during the weekday and see how the neighborhood appears. Get out and introduce yourself and speak with the neighbors. Ask them what their opinion of the area and the neighborhood. Most people will be happy to get a chance to meet you and give you run down. In the end buying a home is not buying a pair shoes where you take them back. You will need to put some thought, research, and soul searching and ask yourself this. Am I ready to take on the added responsibility of homeowner? For me, that answer has always been a clear cut YES!

Hope this helps.

Best wishes to you!