If you’re a first-time homebuyer, does it make more sense to rent now and wait for real estate prices to come down and buy a home at a lower price in the future?
There are a couple factors you need to consider. First, how long are you planning on renting the home? Second, how much would you pay monthly for rent?
If you’re paying $1,500 a month, that equates to $18,000 a year. If you’re going to wait—say—three years for prices to go down and you’re paying $18,000 a year in the meantime, you’d end up paying $54,000. That’s a lot of money! You’re banking on the hope that the home you intend to buy will decrease $54,000 in the next three years just to break even.
In most cases, it doesn’t make sense to wait and rent until prices go down because of all the money you’d throw away on rent. There’s no equity and there aren’t any tax write-offs when it comes to renting properties.
If you buy now, you start making payments on your home now. When you retire in 20 or 30 years, would it make more sense to have a home that’s paid for or would you rather still be renting? Whatever your age is now, add 30 years to it—is your home going to be paid off by then?
Only if you buy a home now. Think about it.
If you have any questions or are thinking about buying your first home, don’t hesitate to give me a call. I look forward to hearing from you.