HOW TO KNOW IF IT'S TIME TO BUY
There's no one size fits all answer. Here are some things to consider when deciding if you should sign a lease or a contract to purchase.
If you plan on staying in one location for approximately 5 years or more, owning could be the right option for you both financially & emotionally. Sure you can buy and sell in fewer than 5 years, but the costs can make it a less viable option.
Most rental properties have restrictions on what sorts of upgrades and customizations you can do during your lease. Perhaps you can't live without a dishwasher or laundry room anymore. Or maybe you really want a pet or a swimming pool. When you own, you can update to your liking and have ALL THE PETS!
Just because you can afford a monthly mortgage payment does not mean you can afford homeownership. Be sure to factor in additional costs to owning a home, such as taxes, insurance, HOA fees, if applicable and of course home maintenence. A good rule of thumb is to set aside 1% of the home's value per year for upkeep and repairs.
Many people think that buying isn't an option because the upfront costs are prohibitive. However, you can obtain a mortgage with as little as 3-5% down, or 0% down for veterans! When you calculate the upfront costs of a rental (first/last months rent, 1.5 months security deposit and 1 month real estate fee), renting can have a hefty initial expense too!
OOOH LOOK, A LIST!
WEIGHING THE PROS & CONS: RENTING VS OWNING
PROS OF RENTING
Freedom to move around.
Landlord pays for maintenance and upkeep.
No expensive closing costs.
Fixed monthly living expenses during your lease.
Lets you try out different areas and spaces.
CONS OF RENTING
You don't build any equity paying your landlord's mortgage.
Less flexibility to customize your space.
Rent could go up in the future.
Landlord could decide to sell or stop renting at any time.
Lack of a sense of permanency.
PROS OF OWNING
Build equity and wealth over time.
Home value will likely increase over time.
Possible tax benefits.
Total freedom to customize your living space.
Sense of permenancy, you're home.
CONS OF OWNING
You're responsible for repairs and maintenance.
Less flexibility to move (greater effort or expense).
Market fluctuations could cause temporary drop in value.
Down payment & closing costs required to purchase.
You're tied to the neighborhood which can impact value.
*If you ask me, the biggest pro to owning is the ability to have a dog (or a cat, if that's your jam).
So many landlords don't allow pets. And well, sometimes you just need a furry bestie in your life.
THE COST OF RENTING OVER TIME
How much will you spend on rent in the next 15 years?
| RENT/MO. | 1 YEAR | 5 YEARS | 10 YEARS | 15 YEARS |
| $1,200 | $14,400 | $72,000 | $144,000 | $216,000 |
| $1,400 | $16,800 | $84,000 | $168,000 | $252,000 |
| $1,600 | $19,200 | $96,000 | $192,000 | $288,000 |
| $1,800 | $21,600 | $108,000 | $216,000 | $324,000 |
| $2,000 | $24,000 | $120,000 | $240,000 | $360,000 |
| $2,200 | $26,400 | $132,000 | $264,000 | $396,000 |
| $2,400 | $28,800 | $144,000 | $288,000 | $432,000 |
*Assuming you find a magical unicorn rental with no rent increase for 15 years.
AS A RENTER, YOU'RE ALREADY PAYING A MORTGAGE...
IT'S JUST NOT YOUR OWN.
SO ARE YOU READY
TO KISS YOUR LANDLORD GOODBYE?
Or perhaps you want to know more about the local market and what's realistically achievable?
I'm here for it. Get in touch to schedule a free consultation.
STILL ON THE FENCE?
Grab a free copy of my homebuyer checklist, and learn what the process is like.
Hi I'm Meg & I'm not your mother's REALTOR.
As a former wedding planner, I have a unique skill set that I use to help home buyers navigate both the logistics and the emotions of buying a home. I don't think of myself as a salesperson - I'm your real estate coach, your logistical coordinator, your house hunting BFF, and your cheerleader.
I don't want to sell you a house, I want to help you manifest homeownership.
MEGHAN RAMSAY
contact
142 ROUTE 23 NORTH
POMPTON PLAINS, NJ 07444
973-686-1500 x259 (o)
201-892-4866 (m)
homes@megramsay.com
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