In most large U.S. cities it is cheaper to buy a two bedroom home than is it to rent one. According to Trulia, buying was cheaper than renting in 74% of the country’s 50 largest cities. In just 12% of the cities, which include New York, San Francisco and Seattle, renting is cheaper. In the remaining 14%, rent and the cost of buying were almost on par.
Another factor that makes owning more affordable are mortgage interest rates being at records lows. Of course, your mortgage stipulations depend on your credit history and cash put down at closing, but lower rates help tremendously with monthly payments.
It makes sense to own if you plan on being in an area for more than a minimum of five to seven years. You do not get anything in return for your rent payments, but are putting money back into a home that you purchase.
Factors to take into consideration when deciding to rent or buy are:
How long you plan to stay. If you won’t be staying in an area for long or have the potential not to keep a property for under five years, rent is probably a better option. Closing costs, commissions and initial homeowners costs would be cost prohibitive.
Do you have cash for closing? Nowadays buyers must usually have 20% for closing because of stringent loan restrictions. If a house is $150,000, you must have $30,000 cash available at closing.
The appeal of renting to many is that the landlord fixes any problems/issues that come along. If your dishwasher breaks, the landlord takes care of it. When considering a home purchase ask yourself if you have money for anything unforeseen. Other costs that come in addition to the home’s sale price are property taxes, heating/cooling, utility bills, etc.