This post is brought to you by our friends at Shaddock Homes, a family homebuilding company known for distinctive designs, superior craftsmanship, and homeowner satisfaction in Dallas, TX.
When it comes to homes, the buying vs. renting decision seems to be constantly on everyone’s mind. And since the real estate and mortgage markets are constantly changing, it’s important to revisit this choice often. Here are some of the things to consider when trying to decide whether to buy or rent your home in 2011.
- Mortgage Rates: Mortgage rates are hitting all-time lows, which can be quite an incentive for potential homeowners. If you have good credit, and understand the financial responsibilities of owning a home, now may be a great time for you to buy a house.
- Home Prices: Even in places where home prices have remained fairly steady, it’s still a buyer’s market. Sometimes, your mortgage will end up cheaper than the price of renting. Be sure to weigh all the costs, though, including home maintenance, when deciding whether renting or buying is right for you.
- Your 5-Year Plan: Are you planning to stay in the same place for at least the next 5 years? If so, buying a home is probably your best bet. If, however, you’re pretty sure you’ll be moving in the next few years, it may be more cost-effective to rent until you’ve settled on a more permanent location.
- Tax and Financial Incentives: Looking to get some money back from Uncle Sam? Mortgage interest is tax-deductible, which can help you get a nice refund every year. Owning a home also helps to build equity, which can increase your overall net worth – that is, if you consider your home a long-term investment and not something to flip in the next year or two.
- Rent Ratios: Take a look around your area – is it cheaper overall to rent or to buy? To find your rent ratio, take the sale price of a house and divide it by the annual cost of renting an equivalent house. If your rent ratio is 15 or less, it’s typically better to buy. The breakeven point on buying vs. renting is about 20, but you need to consider closing costs and maintenance fees in your overall calculations.
Buying a home isn’t necessarily for everyone, and it’s important to look at all sides of the situation and decide on a solution that you’re comfortable with. But 2011 has a fairly good combination of factors that make buying a home very attractive to many people. If you’d like more information on buying vs. renting a house, don’t hesitate to reach out to us. We’ll help you sort through everything to come up with the solution that’s right for you.