November is a great time to recognize the contributions of Veterans. But did you know…
Have you ever wondered if you should rent or buy a home for yourself and your family? Here is a simple case study of a for rent or sale property to show what factors may impact your decision.
An updated home is listed for rent or sale. It has 4 bedrooms and 3.5 bathrooms, plus a two car garage, fenced-in backyard, and gourmet kitchen. It is in a gated golf course community with a lot of amenities.
The home is listed for rent for $2200/month.
Over the course of a one-year lease (typical in this area), you can expect to pay $26,400 per year. You will not be responsible for major repairs or upkeep, but will need to keep the yard and home in good condition. Internet is included, but all other utilities fall to the tenant.
The home is listed for sale for $350,000.
Assuming a 20% down payment of 70,000 and a 3.75% interest rate over a 30-year loan, you can expect to pay around $1611/month.
As the homeowner, you will pay the $200 monthly homeowner’s association dues and be responsible for all maintenance and repairs. Even with these costs, you will often still pay less monthly to own the home than to rent. Plus, you enjoy the pride of home ownership and are able to truly make the house your own.
But that does come with added responsibility and less flexibility. If you are only planning to live in an area for a short time, renting might still be the right choice for you.
Of course, each individual situation can impact the required down payment amount, interest rate, and terms of the loan. You can also negotiate to get the sales price down in some cases. Talking to a real estate agent and loan officer can help you start considering if buying a home is the right choice for you.