If you live in the DC Metro area and currently rent your home, you might be frustrated that a large portion of your paycheck goes towards rent each month. It's hard earned money that you will never see again in your lifetime. For example, the average 1 BD/BTH unit in Arlington near the metro rents for right around $1,850/month which equates to $22,200 per year! That is $22,200/year that you could be using to build equity instead of making someone else more rich.
While owning a home is the American dream and a symbol of economic well-being, for many, it may seem out of reach at the moment. You may feel like you do not have enough money to buy a house at this time or are unsure of your future. Well, for some, buying a property might be more realistic than you think. Given the current low interest rates, buying instead of renting might be possible for you. Click on the following link to try Realtor.com's Rent vs. Buy Calculator, where you can input all the specifics to figure out if buying is actually a better long term answer than renting. It will do an analysis on your current living situation and tell you when buying becomes cheaper than renting as seen in the picture below.
Besides the calculator, I have compiled a list of reasons on why you should buy and reasons on why you should continue to rent:
Reasons to Buy
• Currently, the mortgage interest rates are very low compared to the US historical averages. I'm talking they used to be above 15% and now they are right around 3-4%!
• Buying a house is a good long term investment as houses have a history of appreciating around 3% in value every year on average
• When you are a home owner, there are numerous tax advantages. Your home mortgage interest and real estate taxes are deductible from your income which results in THOUSANDS of dollars in savings!
• When you are home owner, you have the opportunity to make it your own unlike rental properties
• Instead of spending money on rent, your mortgage payment goes towards building equity in your home
Reasons to Rent
• Uncertain about your job
• Uncertain that you want to be in this area for at least 5 years
• Do not have enough money for a decent down payment (At least 3%)
• Have bad credit
• Have large debt/student loans
If you are on the fence between renting and buying, I would highly recommend talking to lending institution. They can run your credentials/financials and give you a clear idea if now is the right time to buy! Plus, there are so many loan programs that exist now that do not require a large down payment. You never know, buying your first home might be more affordable than you think!
For more great real estate advice, check out my other Real Estate Tips and Buyer's Guide.