Whether you are a new resident or an established attending outgrowing your apartment and looking to make a change, a new home is probably high on your wish list. The question is, should you rent or should you buy? There are pros and cons to each option, so here are a few things to keep in mind when making your decision.
Buying a Home
Ah, the joys of home ownership! But is it all it’s cracked up to be? You decide.
1. Tax Deductions – There are several good reasons to buy a home, not the least of which is the tax deduction. If you are in a high enough tax bracket where your property taxes and mortgage interest payment will take you over the standard deduction, then buying a home makes some financial sense.
2. It Can Be An Investment – In general, homes do appreciate in value over time. If you are planning to live in the home for several years, you might see a return on your investment. Of course, even if you move after your residency, you can keep it as a rental or vacation property, making it an even better opportunity.
3. Putting Down Roots – Owning your own home can give you and your family a sense of permanence that can’t be achieved by renting. You can decorate any way you want, remodel to your heart’s content, and even put in a swimming pool if you so desire. Buying your home gives you a pride of ownership you just can’t get from renting.
4. Fixed Monthly Payments – Typically, your mortgage payments will remain fairly stable over the life of the loan. This lets you budget more accurately with no surprises.
1. Debt – Chances are you have student loans to pay back. On a resident’s salary, your budget might be tight and adding to your total debt might not be the best idea. Even as a young attending, that student loan payment might already feel like a mortgage payment.
2. Down Payment – If your career is just getting started, or you’ve had other financial issues, you may not have had a chance to save up for a down payment. Tying up all that capital might not be the best idea at your stage in life.
3. Maintenance and Repairs – There are more costs associated with owning a home than the mortgage payment. Homes require regular maintenance but in addition, there are the unforeseen repairs that can wreak havoc on a tight budget. Things like HVAC repairs, a leaky roof or a busted hot water tank are things that need to be taken care of immediately, whether you have the money available or not.
Renting a Home
In contrast to buying, renting seems simpler, but it has its detractors as well.
1. Flexibility – When your residency is over or you make a job change, you may want or need to move again, renting makes that easier since you don’t have to worry about selling.
2. Worry-Free – When your budget is tight, you don’t have to worry about unexpected repairs. You get the benefits of living in a place without the financial concerns of maintaining a property.
3. No More Debt – Don’t you have enough already?
1. No Tax Break – All the money you pay in rent goes to the owner so you don’t build equity and you don’t get to deduct interest and tax payments from your income tax.
2. It’s Not Yours – While it looks like home, it might not feel like it because you don’t have the freedom to make whatever adjustments or additions you’d like. You’re at the whim of your landlord rules.
3. Rents Go Up – Typically, each year you renew your lease your rent will go up.
As you can see, there are good reasons to choose either option. This calculator can help you decide simply based on financial considerations but there’s more to consider. Buying or renting, it’s your decision to make, but if you still have questions on what’s best for you, please feel free to contact us. One of our real estate professionals will be happy to help you sort it all out.