Renting vs. Buying a Home in 2021
No matter where you live, this past year brought a lot of uncertainty. Now with 2021 underway the housing market is shifting again. Deciding to rent or buy a new home in 2021 comes with a whole new set of questions this time around.
Deciding Whether to Rent or Buy a Home in 2021
More people are working remotely and many are moving away from states with a high cost of living. Families are relocating where the cost of living is lower, or the quality of life feels better. Others are heading toward sunny areas, urban city life, wide open spaces, or closer to family.
The point is this: our goals have shifted and people are moving. With the new landscape, deciding to rent or buy in 2021 is a big decision. One that I hear a lot from clients and after-hours with friends.
Renting vs. Buying: Pros of Buying a Home in 2021
Buy Now and Build Stability with Low Mortgage Rates
If you want to increase stability by buying a home in 2021, mortgage rates are still low but they’re starting to rise. There’s probably no better time to lock in a low rate and get a 30-year fixed-rate mortgage. This brings stability and certainty over the long-term, knowing your monthly payment won’t change no matter what happens to the economy.
Mortgage Payments Build Equity & Savings
Every time you make a mortgage payment, you’re building equity in your home. As long as your home increases in value and you’re paying down principal, you’re building wealth. As an asset, you can borrow against it to invest elsewhere for additional gains..
Tax Advantages to Buying a Home in 2021
Mortgage interest and property taxes are both tax deductible in most states. There are also tax advantages for any capital gains you may have when you decide to sell. Check with your accountant to verify how deep your tax cuts could be.
Renting vs. Buying: Pros of Renting in 2021
Move When You Want
If staying in one place feels limiting, then renting in 2021 might be a smart option. A lot of properties only require a 1-year lease to move-in and many offer month-to-month leases. You’ll have flexibility to move whenever you want and as often as you want. If you decide to be closer to family or change jobs, this is a great benefit.
No Property Taxes or Maintenance
Maintenance and upgrades are typically taken care of by the landlord, either directly or through a property management company. If the water heater breaks or the furnace stops working, you won’t have the headache of fixing it. Or the bill. Also, without property taxes and home maintenance, your monthly costs should be lower than buying a home in 2021.
The Cons of Buying a Home in 2021
One of the big reasons that keep people from buying a home in 2021 is the idea of staying put in the midst of so much uncertainty. In general, buying a home in 2021 could be a good investment and also provide financial stability. But for people who want to keep their options open, signing a mortgage is the last thing they want to do. When you buy a home in 2021, you’re saying yes to a monthly mortgage payment, on-going home maintenance, homeowners insurance, property taxes and a lot of responsibility.
The Cons of Renting in 2021
Perhaps the biggest deterrent with renting is that you can’t control your long-term housing costs. Unless you’re in an extremely long-term lease, your landlord can decide to sell the property, increase rent, or simply stop renting the property. When this happens, you’re forced to look for a new place no matter if it’s a good time to be shopping for a new place. Rents could be extremely high and you’ll be at the mercy of the market. There are also no tax benefits.
If you’re moving for work, to be near family, or just to change your environment, we can help. Starting early to lock in your next mortgage is a smart first step. And working with an experienced mortgage broker makes all the difference when you’re relocating. If you’re thinking about buying a home in 2021, give us a call. We can help you decide if it’s the right time when it comes to your personal and financial goals.