The answer isn’t black and white when you consider, “What costs less, renting or buying?” What’s more affordable is determined by a lot more than comparing a rent payments and mortgage payment.
While buying comes with some additional expenses (more on those later in the post), it also comes with a lot of perks. Yes, you become the master of your own domain and get to make decisions about how your home is maintained.
But beyond that, you can start using your monthly living expenses to build equity. Rather than just spending the money and never seeing those dollars again, you are investing in an asset you can sell or leverage. And that’s huge!
Additionally, the cost of rent does nothing but rise. If you secure a fixed-rate mortgage, the cost of your mortgage payment won’t. This means by buying, you’ll gain a lot more control over your monthly living expenses.
But even with these awesome perks, it’s important to consider the full cost or home ownership to determine if buying is right for you. These expenses include:
Homeowner’s Insurance – Renter’s insurance covers the cost of replacing the stuff within your home. In most cases, this is a pretty nominal fee. Homeowner’s insurance protects you against unplanned damage to your home itself. This damage could be caused by vandalism, storms, theft or fire. Generally speaking, your homeowner’s insurance will cost more than your simple renter’s insurance.
Maintenance – As a renter, when something breaks you call the landlord and they pay to fix or replace it. As a homeowner, all maintenance is your responsibility. You need the skill or the money to fix whatever is broken.
Property Taxes – Your property taxes are determined by the value of your home. They can vary based on they city, county or town in which you live.
Utilities – Utility bills aren’t unique to home ownership. But, the bigger the space, the bigger the utility bills tend to be. If you move into a home that’s substantially larger than the one you were renting, get ready to pay more.
Transportation – It’s easy to overlook the cost of getting around, but it can significantly add up over time. If you buy a home further from work and your daily activities, be ready to pay more for transportation.
Homeowners Association Fees (HOAs) – If you buy a home that’s part of an HOA, you’ll also need to pay those dues. This fee is generally used to pay for the maintenance of common spaces, as well as items like insurance and landscaping.
Want to explore more differences between renting and buying? Give me a call today, I’m here for you.