Rent vs Buy Q&A with Katherine Lyons
St. Louis, Missouri – January 7, 2022 – To rent or to buy? That is the question we are hearing every day in today’s housing market. It can be a difficult decision knowing if you should rent or buy, especially when there are pros and cons to both.
Branch Manager & Loan Officer, Katherine Lyons, walks us through some questions to ask potential homebuyers to help navigate which direction they should take when considering buying versus renting a home.
Q: What are the benefits of owning a home vs renting?
A [Lyons]: There are several benefits to owning a home such as:
- You are paying yourself and not the mortgage of your landlord. Every month you are building equity in your home. You’re investing in yourself and your future. The home will likely increase in value over time.
- In some instances, a mortgage is less expensive then rent. With the correct home loan your monthly mortgage payment can be less or equal to what you are paying in rent.
- Stability in owning your own home is invaluable to some. If you are planning to be in the same town for more than a year it doesn’t make sense to rent. Rent is a great option for a short period of time but being able to make an investment in the long term is a better finical decision.
- Building credit comes with home ownership. Not only building your credit score but building credibility within your community. Owning a home shows your invested in your local community.
Q: How do I know if I can afford to own rather than rent?
A [Lyons]: You will want to ask yourself a few questions:
1. Am I where I want to be for the next 3 years or more?
2. Is my job stable? Will I need to move to move up in the company?
3. Do have money for a down payment or do I need down payment assistance?
*If you feel you will be in the same location, and your job is secure then answer the following questions.
1. What does it cost to rent the home I want?
2. Has rent increased over the last 2 years in this area? If renting a 3 bedroom home is something you feel you can do finically then you need to look into purchasing a home.
For example, talk to your local mortgage lender about down payment options. Do you qualify to purchase a home with no money down or with a down payment of 3%? If so, how much do you need? Or how does that program work? What purchase price do you qualify for? What is your monthly payment and what is included in the payment? Then compare the numbers. Rent on a 3 bedroom home in the neighborhood of your choice could $1,200.00 a month. Buying that same home with a purchase price of $180,000.00 with a down payment of 3.5% with an FHA loan, 30-year fixed term and an interest rate of 3% gives you a payment of $950.00. After you add in your escrows, it is better to buy then rent.
Q: Is now a good time to buy? Why?
A [Lyons]: Yes! It is always a good time to invest in yourself and your financial future.
Q: What are the pros and cons of renting vs buying?
A [Lyons]: Pros for renting are simple: Freedom to move, no maintenance or upkeep on the property.
Cons for renting: You don’t own the property, so you are waiting on repairs to get done and you don’t have input on who makes the repairs or how they are made. You have no long-term investment in the property, and you can’t control if the monthly payment will change or who owns the property.
Pros for owning a home: It is your property to change to your liking. You are building equity into your home. It provides stability. You control how quickly you pay off your mortgage.
Cons of owning a home: You are responsible for the maintenance and upkeep.
Interested in talking with Katherine Lyons about your home loan needs? Contact Katherine today!
About Gershman: Communities, families, and homes are at the heart of what we do at Gershman Mortgage. Our founding principles are based on the core values of honesty, integrity, the entrepreneurial spirit, and putting our customers first. We are passionate and committed to customer service and strive to ensure that we exceed the expectations of our customers. We are a customer-centric company devoted to creating and maintaining long-lasting relationships.
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