Having your own home is an exciting milestone in your life. Owning that home is part of the American Dream, yet for some, renting is the best decision. If you’re struggling with the decision of whether to rent or buy a home Massachusetts, you’re not alone. Explore the many financial and personal factors that will help you decide which option is best. Needham Bank is here to help you every step of the way.
Consider the finances behind buying and renting
When you consider homeownership, you’ll need to have your financial house in order. Typically, a down payment of anywhere between 5% and 20% is required, depending on the type of mortgage you secure. And after you buy a house, it’s important to have enough financial cushion to support your lifestyle and other expenses.
There are multiple theories about how much of your gross monthly income should be devoted to your home mortgage. Some say no more than 28%, with overall debt no more than 36%, to maintain your financial strength. But some homeowners exceed that threshold because they believe they will earn more money as their career grows and their home’s value will appreciate.
Owning a home means you can build equity if you hold the property long enough and it appreciates in value. You also might receive some tax breaks by owning, and your home could turn out to be a fantastic investment if you sell it after it has appreciated significantly. On the other hand, you might determine that it’s better to rent and invest the extra money you would’ve otherwise spent on owning your home.
Personal preferences become factors
The decision to buy or rent also comes down to personal preference.
When you own a home, you control everything from the color of your home’s exterior to the fixtures you install. You are also fully responsible if something breaks or needs to be replaced. In comparison, renting often comes with restrictions on what you can do with your property, but when it comes to maintenance, you can call the landlord.
Another consideration is amenities. Owning a home allows you to add a patio, swimming pool or outdoor fireplace in your yard when you have financing in place, something you likely won’t be able to do as a renter. Renters, however, often get immediate access to similar amenities offered by the landlord without worrying about upkeep, since the cost of a pool, gym or valet parking is factored into the monthly rent.
Homeownership can provide emotional satisfaction that you might not experience when renting. Owning a home means you’re investing in a neighborhood and you can feel a closer connection to your neighbors and community because of your commitment. That said, you’ll likely worry more about local politics that affect property and zoning, and you’ll want neighbors who respect their properties in order to maintain the neighborhood’s value. As a renter, you can easily leave if you grow dissatisfied with your neighborhood.
Interested in weighing the cost of renting versus buying a home? Use Needham Bank’s online calculators to crunch the numbers and determine the financial commitment for each.