Should You Rent or Buy?

Purchasing a home is one of the most momentous decisions any person could make, so it should never be taken lightly. Owning your own home is part of the American Dream, after all, but at the same time those who are less sure about their situation in the future and who are holding out to see what that future may hold could benefit from hesitating on their home purchase decision.

On the other hand, those who are stable in their life situation and do not intend to move for the next several years can have a lot more to show for their living expenses if they buy rather than rent. The autonomy of home ownership and the financial security of equity are both tempting prospects, especially in the face of rent money that effectively “disappears” every month.

To help settle the decision and make the call that works out best for your financial situation and living needs, here are some factors to consider when deciding whether renting or purchasing a home is the best choice to make:

Your Market

The biggest determinant is not necessarily your financial stability as a whole but rather the picture of your current housing market in the area you live. The average home price in non-rural areas will be start at roughly the same range and increase greatly from there given the size and amenities of the home, including location. However, with renting the prices can vary greatly. Some towns offer low rent rates for relatively high-end homes, whereas other markets charge a good portion of the median salary for a one-room shack.

In Southern Florida, the market for renting versus buying usually favors the latter category. South Florida real estate website “The Real Deal” recently reported that the Miami-Dade area has some of the highest rents compared to median incomes in the country, bested only by areas like Philadelphia where rental inventory is slim.

Broward and Hillsborough likewise have rents that are proportionally higher than the average monthly mortgage payment for homes in those areas. Only Palm Beach had a nearly even market, with both rentals and typical monthly payments hovering around 37 percent of the area’s median household income. Visit Marina Title’s Realtors page, for more information.

Looking at figures in areas like these, the economical question becomes less “can you afford to buy a home” as opposed to “can you afford not to buy a home” given the higher cost of renting.

Future Needs

Naturally, if you intend to leave your area in five years or less, buying a home may not be prudent.

Worth noting, though, is that in some areas like Miami and Detroit, homeowners can begin to build positive equity on their homes in less than a year after purchasing. In other words, after just a year of mortgage payments, the homeowner will owe less than the home is worth. In the event of the unforeseen, the homeowner can sell the home and break even or obtain a tidy profit even within that miniscule amount of time, although it is never guaranteed.

The bottom line is that anyone who wants to stay in an area for more than a few years would benefit from owning their home rather than merely renting a property.

Lifestyle

Aside from monetary considerations, there are other practical concerns when deciding whether to rent or buy. A sad truth is that many rental properties hamper their tenants’ ability to enjoy themselves, either because of the nature of the overall housing complex, the landlord’s strict demands or simply because the tenant pines for the ability to renovate their home as they see fit.

Anyone suffering from a longing to stretch their legs in a place they can call their own will never truly be happy in a rental. Even those that want just a small bit of independence would likely be better served by putting their money every month towards a building they own as opposed to a building they have permission to live in.

Coming up with the final decision on whether to rent or buy will never be easy. One thing to be certain of when moving from renting to buying is that you adequately protect your investment and most precious asset.

Have your new home covered not just by homeowners insurance, but also with title insurance that can protect your ownership from contention for the lifetime of your ownership. Contact us through our email at [email protected] or our phone number at (305) 901-5628 to learn more about how important and valuable title insurance can be.