Should I rent or purchase a home?

Should I rent or purchase a home?

What is more cost effective? Renting or buying? This depends on three factors: your market, where you choose to live and whether you like to do home improvement and maintenance projects yourself.

There are several important reasons to buy a home in the seacoast area of NH. Buying a home to build equity is one of the main reasons why prospective buyers jump into the housing market. With every mortgage payment, you are increasing your degree of ownership. If you live in your home long enough, you can borrow against the equity in your home to, for example, to pay for major purchases. Furthermore, if interest rates drop, you can refinance your home loan at a lower interest rate, thus saving you up to thousands of dollars a month. Once you have paid off your mortgage, you can borrow against the equity in your home fund major purchases, such as buying a second home.

When you own a home, you qualify for tax deductions. You can deduct your mortgage interest and property taxes and even avoid capital gains on the profits from the sale of your home. In addition, you can work from your home to qualify for home office and utilities deductions.

When you own your home, you have creative control. You can paint the walls any color you desire, build additional rooms, remodel your kitchen, hang your pictures up on the walls, etc… Home owners have maintenance choices. You can do it yourself or picking your own contractor.

There are several reasons to rent. Renting gives you the flexibility for research and discovery when looking for an area before making that longer term commitment to buy.

Career and income uncertainty is a factor. If you are considering job changes in other locales and/or might need to move in the near future, renting is the way to go. If you expect a pay cut or hike in the near future that will affect your ability to borrow or pay for a mortgage, renting is an appealing option.

Another reason is bad credit. Building a history of on-time rental payments will create the sort of credit you will need to qualify for a mortgage. There are no maintenance expenses. When something breaks down, just call the landlord.   No need to go to the store.

 

Utilities are sometimes included. The landlord may pay for utilities, such as water, sewer, garbage and even heat and water. Consider and weigh the options for renting and buying in the Dover and Sea Coast real estate markets. Decide what is most cost effective for you!

 

Greg Daly

Mr. Daly is a guest blogger and has traveled internationally