Is It Smarter to Rent or Buy?
The short answer is that it depends on your own housing market. A Realtor.com report, as discussed on the National Mortgage News official site, notes that it’s “cheaper to rent” in some of the largest housing markets in 2023, but that does NOT mean it’s the same everywhere.
According to Realtor.com, renters struggling with buying or signing a new lease should consider what basic things they want from their home. Does buying a home satisfy those desires? How much stability do you need compared to the flexibility renting offers?
The trade-off may be worth the extra expense for some.
Renting or Buying: It Depends on the Market
Where you look to use an FHA loan to buy or build a home counts. For example, Realtor.com reports that Memphis, Tennessee, typically costs more to rent--some $400 more per month. Pittsburg, PA comes in at nearly the same amount; it’s roughly $350 more expensive each month to rent there.
St. Louis, Missouri, and Baltimore, Maryland both come in under $100 more a month to rent, but as you can see, the price tag varies by location, and it is smart to shop aggressively for a better price and terms in today’s housing market.
Rent or Buy? Cost Considerations
While it’s true that an apartment security deposit is cheaper than a down payment, renting does not allow you to refinance later to get into a lower monthly payment, nor does it allow you to borrow against the equity you have built up over time by making your mortgage payment.
Renting earns you no equity, and at the end of the lease, you don’t have any added value or borrowing power after making all those payments.
For some, that’s not the point. A renter who prioritizes making the lowest payment possible may be satisfied with a lease; those who want something to show for their payments won’t be satisfied with renting.
Nor will those looking for the stability of owning a home versus the uncertainty of renting. Will your lease be renewed at the end? Will the apartment owner decide to “go condo” and stop renting? These are issues you don’t have to deal with when you own the property.
Talk to a participating lender about your FHA loan options and what makes the most financial sense for you.
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