This is a common question for those considering the purchase of a home. The debate over whether to buy or rent is not as obvious as it may seem. There are factors that need to be considered before making a decision. The answer to this question changes depending on where you live, how long you plan to stay, and how financially stable you are.
As far as buying goes, interest rates are still historically low. Relatively expensive cities such as Boston, New York, and San Francisco may take longer to get a return on investment than, Detroit or Cleveland. However, rents are high in Boston, New York and San Francisco. If you have the financial means to buy, and are savvy about up and coming areas, and/or are willing to put in some sweat equity, you may very well enjoy appreciation in three to five years.
Generally, in Boston, Cambridge, Somerville and most of the greater Boston area, home buyers who remain in their homes for at least three years will save an average of 20 percent over those who rent. This number may dramatically increase over time; the seven year home owner may save around 45 percent over renting.
While owning a home may seem like an expensive undertaking, all the initial costs such as the broker’s commission, title insurance, legal fees, and closing costs will eventually be offset by tax write-offs and appreciation. It is important; however, to consider also maintenance costs, especially if you are purchasing an older home.
If you are uncertain whether you will remain in an area for 3-5 years, consider renting. If you cannot afford to put a 20 percent down payment on a home, or do not qualify for a MHF loan, then renting may be better the better choice.
