Buying v. Renting - Things to Consider
When considering whether you should buy or rent a place to live, there are some things that you need to think about before you make such a major decision. The economy has wreaked havoc on the housing market in the last few years, and this has caused the decision to buy or rent a little more complex. When trying to make that decision, you have to be diligent and pay attention to interest rates and the particular location you have in mind to live. Different cities are more expensive than others so it is important to do your research before moving to a new city.
Interest rates right now are about 4.5% on a 30 year fixed rate mortgage. As you can see below, when you consider the price of rent in a city such as Chicago, Illinois, which is approximately $1,700 per month, buying a home in Chicago is much more of a saving than renting. Now let’s look at a city like New York where the median home price is $520,000. Rent in New York is known to be quite expensive with all of the penthouses and high rises, but with a median rent of $2,850 you would still be saving money by buying a home rather than renting. Buying is the better option in most of these scenarios because the interest rate is still very low. If the interest rate would start to rise again between 7% and 10%, than renting would probably be the cheaper option.
CITY MEDIAN HOME PRICE MEDIAN RENT
Chicago, Ill $170,000 $1,700
New York, NY $520,000 $2,850
Houston, TX $200,000 $1,800
One more thing to consider when deciding whether to buy or rent is how long do you plan to stay in your new home. For example, if you only plan on staying for a couple of years, you might consider renting, but if you plan on staying in your home for ten years, then it might be advantageous for you to consider buying. The most important thing for you to do before making this decision is do your research on interest rates and the particular city you have in mind. This will give you the opportunity to make the best decision for you and your family. The decision to buy or rent is a major one, because you will be investing a lot of time and money into your new home, and at the same time you want to be able to save as much of your hard earned money as you can.