In a changing real estate market, it can be a challenge when deciding to rent or buy a home. There are trends to consider, like cost of rent versus mortgage rates. Buying a home is a large commitment and investment, so you wan to make sure it’s worth it. The New Pittsburgh Courier put together some things to consider when making the decision to rent or buy.
- Where you are:According to the article, in more than 70 percent of major markets, buying beats rent costs after two years. Zillow found it takes an average of 1.9 years to break even. In larger cities, it can take up to three years.
- When to buy: Black Knight Financial Services did a study that showed 21 percent of median income is required to purchase a median-priced home with a 30-year fixed-rate mortgage today. However, if home prices and interest rates continue rising at the same pace, the average monthly payment on a home will rise too.
- How long you stay: The longer you stay in a purchased home, the less risk. Over longer periods, home prices are expected to rise at least a bit. After after a shorter period, like five years or less, there could be loss of value.
- Affordability: “CPAs advise not spending more than 28 percent of your gross pretax income on your monthly housing payment. Another rule of thumb is that your combined debt (housing expenses, credit cards, student loans, alimony, car loans, etc.) should be between 30 percent and 40 percent of your pretax income,” wrote the New Pittsburgh Courier.
- Costs: Without rent control, your rent will probably rise over time. However, a fixed rate mortgage will not. You can build more equity from owning rather than renting, too.
It’s necessary to figure many costs when deciding to rent or buy. At RE/MAX Paradise, our agents can help you decide to rent or buy a home in Miami. Either way, you will love the amazing city and there are beautiful homes under both options!