By Karen Stokes
Homeownership has widely been known as part of the American dream. There comes a time when adults need to make one of the biggest financial decisions of their life: whether to continue renting or to buy a home.
There are advantages and disadvantages to both, and there are various factors when considering which is best for you.
Julie Davidson, realtor at Keller-Williams, works with individuals looking to buy or sell homes in Milwaukee.
“Nationally, rents are going up after the recession. When paying rent, you will be no closer to ownership and there’s no tax incentive,” said Davidson. “Interest rates are still reasonable. It’s a good time to buy a house.”
According to research from the National Association of Realtors, in the past five years in Milwaukee, rent amounts grew 11.08 percent, but renter’s income only grew 2 percent. The increase of mortgage payments in those same five years was 2.84 percent.
According to a recent article from Realtors.com, 2015 is a great time to buy a home.
There is a healthy inventory of homes, and mortgage rates are low. Buyers can take advantage of energy credits on taxes and write off 30 percent of the cost as part of the Residential Renewable Energy Tax Credit.
Additional advantages for purchasing a home include building equity in your home, which provides an asset when you are ready to sell. Homeowners can receive tax benefits on their federal taxes to offset the cost of housing. You can use your home as an investment, and home ownership strengthens neighborhoods and communities, according to Moneycrashers.com
Buying a house is a huge commitment. If you’re not financially ready, now may not be the right time. The costs of buying are more complicated than renting. Because of the difficulty involved in making this choice, it is best to seek a professional to help you with your decision-making.
Select Milwaukee, 3215 W. State St., helps people achieve and maintain home ownership. Select Milwaukee is a one-stop shop for affordable and sustainable homeownership.
Irma Yepez-Klassen, associate director of Select Milwaukee said, “Right now the interest rates are favorable and people can buy at the same rate they are renting, but they have to make sure they are ready and buying for the right reason. We offer monthly homebuyer workshops to navigate them through the process.”
On the other hand, there are advantages to renting. Renting is flexible. Whether you are moving up the corporate ladder or chasing employment opportunities, being locked in to a 30-year mortgage could make it difficult to relocate if the right career opportunity presents itself.
“People are more transient, they need to get up and go,” said Davidson. “People need to be more portable.”
Another positive to renting is that there are no hidden costs.
The cost of buying is more complicated than for renting.
Costs of mortgage includes property taxes, insurance, home improvement, home maintenance and if you own a condominium there’s an association fee.
With renting, a renter knows exactly how much his or her rent is each month and any maintenance that needs to be done is the responsibility of the landlord. Renters insurance is less expensive than homeowners insurance.
Renters are not tied down to mowing the lawn or shoveling snow. Some people find this freedom as the American dream.
“People have to weigh out what they can afford and balancing that out with their financial goals,” Davidson said. “It’s totally up to the individual.”