There are many advantages to being a homeowner, but nobody can deny that renting has some of its own benefits as well. Comparing the cost of renting vs buying depends on many factors, like monthly rent, home price, length of time you plan to live there, or what your mortgage rate would be. Estimating these values can help you determine which is right for your current situation.
We’ve compiled some costs for you to keep in mind as you consider whether to rent or whether to buy:
Costs To Rent
Some costs that factor into the renting equation:
Similar to your mortgage, rent is an obvious monthly expense. The challenge with rent is that it usually goes up each year, unlike a fixed-rate mortgage. It is difficult to predict what your rent will be just two years from now unless your property is in a rent-controlled area.
Not all renters carry insurance, but it’s good to account for this fee when calculating total costs. Many landlords require renters to have insurance.
Depending on how your lease is structured, you could be responsible for all utilities, no utilities, or anywhere in between. In larger communities, the bill could be an average of the entire building, which means no matter how much water you save, if your neighbors use more, you pay more.
Costs of Home Ownership
This cost should be considered when deciding whether to buy or rent. A lot of the time, it is included in your mortgage payment. You can learn how property tax is calculated based on the assessed value of your home.
Many renters are required to have insurance, but homeowner’s insurance is a must. It may be just a small portion of your overall budget but it’s worth taking into consideration when calculating your costs. The cost of homeowner’s insurance varies by location.
Utilities have a general rule of thumb: the more square footage, the higher the utility bills. Take that into consideration if you’re upsizing. It’s a good idea to inquire about utility costs from either the seller or your builder. Many factors, including extreme temperatures, frequency of laundry, and the number of lighting fixtures and technology items, affect your utility bills. The good news is that most new homes tend to be energy efficient.
For most homeowners, the mortgage is part of their long term future. Some think of it as a tradeoff for rent that is more predictable, especially with a fixed rate. Use a mortgage calculator to predict your future mortgage expenses.
Obviously furnishing a larger space will cost more, but this is typically an infrequent expense. You can also build your collection over time.
Maintenance and Remodeling
Owning your home means being responsible for its upkeep. Maintenance and remodeling costs are lower in new homes because they include newer appliances, modern technology, and warranties.
Ready to start your journey toward homeownership? We’re here to help!
As proud members of the esteemed, small-knit Eden Prairie small business community, we are active participants in everything our area has to offer. Since 1995, we’ve been committed to earning the trust of our community. With over 4,500 homes sold in our region, we have the knowledge and experience you need when you are looking to list or buy a home in Eden Prairie. Give us a call today and experience for yourself how we became the #1 sales team in Eden Prairie.