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Costs Of Renting Vs Buying

The best place to start is why people should consider buying versus renting a home and when the time is right. It’s not as simple as “everyone should buy as soon as possible” like many agents will always say, but rather more of a situational type of decision based on many factors. Some of those factors of course include the type of housing market that exists and what a person can actually come out of pocket to get into a home. If we are using right after the pandemic, it would be considered one of the worst times to buy as buyers were offering ridiculous terms just to compete with investors who had cash on hand at the lowest rates ever. Now that we have more inventory available, it means you could get more favorable terms despite mortgage rates being slightly higher.

One way to look at the fundamentals of renting a home is that you are in fact paying someone else’s mortgage or contributing to their passive income. All homes that are on the rental market are owned by someone or some company and you need to look at your contributions as the terms you agree to (example: 12 months at $2500 per month is a $30,000 contract). Now on the other hand, the way a mortgage works is you pay interest based on an amortization model which means you pay more interest than principle so you don’t necessarily build as much equity as possible. Now an immediate solution for that is to buy below what you are approved for, and continue to make the payments you could afford to apply more payment towards your principle so you can access that equity sooner.

We at DW Agents really like to strategize with everyone renting to see if they would benefit from buying a home during that current time given their individual situation while also considering where our market predictions are. So basically if you happen to have good credit with decent employment history, then you could in fact be a great candidate to buy and possibly purchase a home with close to what the move in costs for a rental would be. Our lenders we work with have various programs that help different types of buyers where the Government could contribute towards your closing costs and your down payment while we can also work with getting seller credits to help you with your out of pocket expenses. A perfect example would be when a home that fits your rental criteria has been on the market for a while and the seller has aggressively decreased prices, then that might be a great candidate to ask for seller contributions to make your out of pocket expenses be cheaper than a deposit on a rental.

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