A decision that many people face in life is deciding whether it is cheaper to rent vs buy a home in Michigan.
The answer is not the same for any two people since there are so many variables in basing your housing decision.
The best place to start is by researching your options and to develop the criteria to weigh your options.
Top Reasons to Buy a Home
When you feel that you are ready to buy a home and settle into your own place there can be many benefits of owning a home.
The Pride of Home Ownership
Having a place to call your own helps you fulfill the American Dream. When you no longer have to pay rent and are paying for your own place it is a great feeling.
Building Appreciation and Equity in your Home.
When you own a home and pay your mortgage payments, the balance goes down with each payment. This combined with home appreciation overtime helps to build equity. A home is one of the largest retirement savings for most Americans.
Tax Deductions and Interest Deductions
When it comes to tax time there may be additional benefits to owning your own home. Property Taxes and Mortgage interest may give you additional deductions on your income tax returns. While most people will simply take the standard IRS tax deduction, if your taxes are high, you may have additional savings.
Capital Gains Exclusions
When you own your own home and eventually sell it, your gains are tax free up to $250,000 for a single person and up to $500,000 for married couples. You are eligible for Capital Gains exclusions on the sale of a home every 24 Months.
Rent vs Buy Research
According to CNBC, the tides are turning from the majority of homes being cheaper to buy to most homes being cheaper to rent.
Recent studies show that in only 35% of the Nation’s counties, it is cheaper to own a home than to rent. This is down from 44% the previous year.
“The monthly costs of buying and owning a home that you occupy are up 14 percent over the past year, more than three times the annual increase in rent rates nationally, according to realtor.com. Rents are up just 4 percent.”
This different has been countered in 2020 with the recent drop in mortgage rates which tilts the scales more in the favor of buying vs renting. With lower mortgage rates, buyers are able to buy the same home for a lower payment than in 2019.
Reasons to Rent a Home
On the converse, owning a home comes with many liabilities and obligations. When you make the decision to buy a home you are making a long term commitment that may affect your life for the foreseeable future.
When you consider buying a home you must also compare the additional costs you will have above and beyond your mortgage payments or rent.
Extra costs for owning a home include higher utilities, water and sewer, lawn maintenance, snow removal, trash service, and home maintenance costs.
When you are a renter and your toilet stops flushing, you call the land lord and tell them to come deal with it. When you are a home owner you are rolling up your sleeves and grabbing a drain snake or hiring an expensive plumber.
Factors you should consider in Buying vs Renting
How long do you plan to stay? If your plans are temporary or less than a few years then the transaction costs and extra obligation will easily wipe out any benefits you have by owning your own home.
Do you have the cash for closing? Most mortgage lenders and banks require down payments to purchase a house. If you do not have money for a down payment and cost associated with closing (title fees, appraisal etc) then buying a home may not be an option.
Related: Buying a Home with No Down Payment
Learn the Cost of Home Ownership
Do you know the full costs of owning this home? In addition to the mortgage are there home owners association fees, extra insurances (flood insurance) or extra taxes that must be paid?
Costs of Heating and Cooling a home
Also have you contacted local utility companies to ensure you have an estimate on heating or cooling a home of this size?
Getting a New Job when Relocating
Are there jobs in the area you plan to move? If you buy a home and then lose your current employment, will you be able to find new work quickly or will you need to move? With the unemployment rate at an all time low, this may not be a problem.
The Un-measurable Benefits of Owning a Home
Overall many would agree that buying a home vs renting is a difficult decision that only you can answer for yourself. The freedoms of being able to paint the walls of your own home and doing weekend improvement projects is immeasurable by anything you can put into a calculator.
There are obvious benefits to both options however before you make the decision to buy a home because you smell your apartment neighbor’s spicy food cooking, do your research and compare the options before you decide if you should buy vs rent.
Stop Renting and get pre-approved to buy a home
Submit an inquiry below to have a mortgage professional review your situation to see if you can buy a home and stop paying your landlord’s mortgage or speak with a licensed mortgage broker now at 800-555-2098.