Is home ownership the American Dream?
Is renting the equivalent of throwing your money away?
“Home buying versus renting is a multifaceted decision. It takes into account your financial situation as well as personal and emotional choices,” says Ellsworth Buck, Vice President of GreatFlorida Insurance, Florida’s largest independent homeowners insurance agency.
There are pros and cons for home buying and renting. A one-size-fits-all answer does not exist. Fortunately, there are some considerations to factor that can help you make your decision.
Most experts agree that your monthly mortgage or rent should not exceed 30 percent of your annual income. This is merely a guideline and it is important to review your other expenses before making a final determination.
Buying is more expensive once you factor in the cost of the home purchase, taxes, homeowners insurance as well as maintenance and repairs. A down payment is typically between 5- 20 percent, although government programs are available to help home buyers put as little as 3 percent down. Closing costs are an additional 5 percent.
Many people rent because they lack a down payment or they have poor credit. Renting generally requires first and last month’s rent as well as a security deposit up front, making for a significantly smaller payment.
Keep in mind, investment educators The Motley Fool, point out rent historically increases five percent each year but a mortgage payment is locked in and does not change. Owning allows you to build equity but equity takes time to build.
In some markets across the U.S. rental prices continue to rise making a mortgage payment less than a monthly rental payment. “Rents are rising faster than wages throughout most of Florida,” says Buck with GreatFlorida Insurance, Florida’s leading independent homeowners insurance agency.
RealtyTrac reports, “Low interest rates and reasonable housing prices make South Florida, ripe for buying.”
Recent job growth and a population increase, along with affordable housing are drawing many buyers into the market.
Forbes reported that Florida is the best state to invest in home ownership due to economic recovery and the addition of nearly a quarter million jobs in the past year. They list Orlando, Tampa, Ft. Lauderdale, Sarasota, Jacksonville, Cape Coral, West Palm Beach and North Point as being the best cities to buy a home in 2016.
Renters are not always at a disadvantage. We don’t always know what the future holds as seen by the 2008 housing bubble bust, and that can make a significant difference when deciding to buy or rent.
Renting is ideal for those who desire for a low maintenance lifestyle and those not settled in one area or do not plan to stay in one place long. While homeownership can benefit from tax breaks, the breaks can be oversold to those with moderate priced homes.
What’s better, renting vs buying can be a difficult prediction to make and sometimes you have to go with your gut.
Whether you are looking to buy or rent a home, GreatFlorida Insurance can help you protect your valuables. We offer affordable options for homeowners insurance as well as renters insurance. Give us a call today.