By Jarrod Heil
Comprar frente a alquilar: El gran debate de su situación de vivienda
Desde el comienzo del debate moderno, el objetivo de muchas personas que alquilan es algún día ahorrar lo suficiente como para comprar una vivienda propia. Y con razón.
Rather than renting a home and never seeing the monthly rent money ever again, buying a home means that you’re putting equity toward something you can make your own.
But buying a home is expensive and ties you down to a specific location for many years to come. There’s no other way around it. Due to expenses derived from closing costs, taxes and real estate commissions, it’s recommended that homeowners stay put for at least five years after purchasing.
Those three fees alone can set a new homeowner back anywhere from 7 percent to 15 percent of the home’s purchase price, which will take a few years’ worth of equity building to make back.
Let’s dive into some of the often-overlooked facets associated with buying and renting a home:
Upfront Costs for Renting vs. Owning a Home:
The big upfront costs associated with purchasing a home are the down payment, closing costs and real estate commission. Down payments can be anywhere from 3 percent to 10 percent — or higher — and closing costs and real estate commission can set you back up to 15 percent of the home’s purchase price. Home buyers are also required to purchase homeowners insurance, which is a little more expensive than renters insurance.
Renters are likely to face a similar number of upfront costs, but theirs total much less money. Renters must pay first and last month’s rent, security deposit, and possibly a non-refundable pet fee. Tenants are strongly urged to purchase renters insurance before they move into their new rental home, and this cost is annually less than homeowners insurance.
Costs for renters are pennies in comparison to the high costs associated with owning a home.
Since the average price of a home in the United States is around $200,000, it could cost a homeowner up to $30,000 of non-refundable costs to move in — and that doesn’t even include the down payment, which remains as equity in the home.
If a renter wanted to move into the same $200,000 home, it would likely only cost them a price tag of three month’s rent (first, last and security deposit), which is likely around $4,500.
Even if you have enough money to cover all the costs associated with buying a home, that doesn’t necessarily mean you’re ready to become a homeowner. There are a few other important things to think about before signing the dotted line on the mortgage.
Can You Stay in the Home for at Least 5 Years?
If the answer is yes, you may be ready to purchase your new dream home. If the answer is no, you may want to think about renting a little while longer.
The reason being is that it takes about five years for your home’s value to increase enough to recuperate all the non-refundable fees associated with the purchase. Staying in a home for less than five years before selling it could actually cost you more money than it would to rent that same home.
Add in any repairs and improvements you’ve made to the home and that monthly rent installment looks more and more enticing.
Renting is good for people who plan, or are willing, to relocate in the next few years. Because they’re not tied down to a 30-year mortgage, the minimum financial responsibility and ease of relocating are real perks for renters.
Even if you need to move out of your home before the five years is up and don’t want to sell it, you could always think about renting out the home. Then you’re opening yourself up to greater risk, especially since you’re likely to be moving out of the area.
What Does Your Credit Score and History Reflect?
While renting a home calls for more lenient credit requirements, buying a home requires that you have good to excellent credit. Unless you’re buying in cash, lenders check your credit history and gauge your previous payments and overall score to figure out how reliable you’ll be at paying your monthly mortgage payments on time.
If a homeowner defaults on their 30-year mortgage, there are many more steps that make the foreclosure process long and drawn-out. Lenders are usually given the rights to re-sell your home, but they still lose out on a significant amount of money during the foreclosure process.
If a tenant misses a few monthly rent payments, it’ll likely hurt the landlord’s wallet a bit, but not to the tune of a home foreclosure. A landlord can simply evict the tenants and find someone else who’s willing to rent the property and make their payments on time.
Whether you’ve decided renting or buying is the better option for you, let Universal Property help you with your home insurance needs.