Deciding whether buying a house in Elk Grove or renting is right for you can be a difficult choice. This has long been a debate when making a decision that involves a big portion of your monthly expense, but finances should not be the only consideration. Buying a house can be a good investment in some cases, and this can vary from market to market. In some markets, renting may be the better option. Take a look at the following list as you consider between renting or buying a house in Elk Grove.
Costs of Buying a House
There are many more upfront costs to consider when buying a home in Elk Grove compared to renting, so let’s examine them from the point of view of recurring costs. The recurring costs a homebuyer incurs include:
These – principal plus interest – you’ll have to pay for the next 15 or 30 years. And the amount of the payment over the life of the loan depends on whether you have a fixed-rate or an adjustable-rate mortgage.
This yearly expense, your property taxes serve to fund schools, infrastructure, and other necessary community services. The fact is that these costs can go up every time the county assessor decides your property is worth more money.
If you have a mortgage, you must carry homeowner’s insurance to protect your lender. According to the website Value Penguin, in 2018 the average annual cost for homeowner’s insurance nationwide is $1,083.
PRIVATE MORTGAGE INSURANCE (PMI)
If you were unable to pay 20% down, then you’ll have to pay for PMI, again to protect your lender. Average monthly payments run around $50 to $200. For FHA loans, these remain for the life of the loan.
Homes require a lot of upkeep and maintenance, and on average your annual maintenance expense will be about 1% of your home’s total value.
Costs of Renting
The recurring costs of renting are usually less than those for buying a house in Elk Grove. They include:
This is a given, but monthly rents can vary widely from area to area depending on a host of factors. For a 3 bedroom home in Elk Grove, the average price according to Rentometer is $1924
For many rental properties, you’ll have to pay monthly pet rent if you want to have pets. Typically, it runs about $10 to $40 a month depending on the kind of pet and the base rent.
This isn’t a requirement, but it’s a good idea if you have anything of any value. Because the rates for renter's insurance are low, it makes sense to protect your belongings.
If you rent an apartment, you’ll have to pay to do laundry, either using coin-operated machines or by way of a monthly laundry fee.
The Top 4 Benefits of Buying a House
With those financial considerations out of the way, it’s time to consider the benefits of buying a house in Elk Grove, including:
Over time as you make your monthly mortgage payments, you will pay more and more on the principal, the actual amount of money borrowed. This is much like a savings account in that you can borrow against it if you need to when you reach a certain amount.
Owning your home affords several tax benefits and deductions, including homestead exemption and deductions for mortgage interest and property taxes.
3.POTENTIAL FOR RENTAL INCOME
Every home is an investment property because you can always rent out part or all of it. It can, then, become a source of income while you’re building equity.
4. FREEDOM TO ADD YOUR OWN TOUCH
As the owner of your home, you have the freedom to decorate it or change it in almost any way you want.
Top 4 Benefits of Renting a Home
Renting has certain significant benefits as well, and these include:
When you rent, the landlord is responsible for all maintenance and repairs, and you don’t have to invest any effort or money in these.
Since you’re not tied to a mortgage, only a lease, renting makes it much easier to move. And you can usually break a lease by paying an extra fee or by subletting your place.
3.SAFETY FROM MARKET WHIMS
As a renter, you don’t have to worry about fluctuations in the real estate market, about whether the property is appreciating or depreciating.
4.LESS STRINGENT CREDIT REQUIREMENTS
You can usually rent with less-than-stellar credit even when you might not be able to get a mortgage to buy a house with that same credit.
So, renting or buying a house in Elk Grove-- which one is right for you? Maybe you should speak to a real estate professional in order to make an informed decision
Deciding between renting vs. buying a house in Elk Grove? We can help! Contact us today!