Buying vs Renting a Home in Denver
Buying vs Renting a Home
WalletGyde has partnered up with long time realtor, Hope Stafford at Keller Williams DTC to help you navigate through the best financial option for you when deciding to rent or buy!
You are a millennial living in Denver, and your lease is up. You need a place to live, but should you rent again or try to buy? Are you broke? Do you have bad credit? Are you unemployed? If the answer to these questions is yes, you may need to stick with renting and work on getting a better job, paying down debt and having better spending habits.
I believe everyone’s ultimate goal should be to buy, but it has to be the right timing. You need to have a down payment and good credit, and you also have to have consistent income. I am actually in the middle of deciding this myself! Like most millennials, I have never bought a home before. I need to figure out if I should rent a place and keep saving, or use my savings to buy my next home. I came up with a list of benefits and disadvantages for both renting and buying.
“Ninety percent of all millionaires became so through owning real estate.” -Andrew Carnegie
Benefits to Buying
- You are paying into your equity, not someone else’s
- You have stability because your monthly payment is fixed and won’t go up (except taxes)
- It is a good way to build wealth when you sell
- Even if you move, you can rent out your home and make money
- You can claim your mortgage interest and property taxes when you file your tax returns
Disadvantages to Buying
- You need at least 3.5% of the purchase price for a down payment (although some credit unions are offering 0%, which is risky because if you cant save anything for a down payment you probably are not stable enough to buy)
- You have to fix any maintenance issues that arise
- You can’t just up and move, it requires either selling or renting out your home
- Your home value is subject to the market conditions
- Your credit needs to be good enough to qualify for a loan
Benefits to Renting
- Your monthly payment may be lower than a mortgage
- There is flexibility with leases if you are not planning to stay in one place long term
- Landlords will fix maintenance problems
- You don’t need a down payment
- The market conditions won’t affect you for the length of your lease
Disadvantages to Renting
- You are paying someone else’s mortgage and helping them get richer while you have no equity
- You are spending money on rent that could be savings towards a down payment
- You could have an awful landlord
- Your rent will likely increase at the end of your lease and your payments will go up over time
- Your landlord could decide suddenly to sell and not renew your lease
No worries, here at WalletGyde we have your back and will be posting more information about the housing market in Colorado to hopefully make things a bit easier! Follow us on Facebook, Instagram, and Twitter for more!
Sources: www.Realtor.com, www.Inman.com, www.keepingcurrentmatters.com