Affordability and Permanency
An important step in buying a house is creating a timeline and determining if either renting or buying in New York City will save you money. Buying a home is more suitable for permanent situations because along with your mortgage there are property taxes, repairs, and other fees that come along with a home. Many of these wouldn’t be worth the costs if the resident didn’t plan on living in the home long enough to reap the benefits of their investments. Even if you could technically afford to buy a home it is crucial to also determine if you can maintain any current or upcoming obligations like food, utilities, clothing, etc.
Other expenses will continue to accumulate after you’ve purchased a home. To know if buying a home will make more sense than renting is when after adding your purchasing costs and mortgage payments over the years equal to less than the same amount of years renting.
In many cases, just over 5 years if how long you’d need to plan on living in your home for buying to be a better option than renting in the long term. For this reason, people with lower level jobs or unstable employment situations may not want to buy a home, there needs to be a certain amount of confidence that your situation won’t change anytime soon after you’ve acquired the house that would cause you to move or default.
While buying can be more affordable in the long term, your situation may not provide the stability you need to commit you buying a home. Furthermore, you may not have found the perfect neighborhood for you to want to live permanently. Word of mouth, searching the surroundings and driving through the neighborhood can provide a good idea but it is hard to make a definite decision without living there. Renting provides your ability to make that decision and essentially “try” the area before committing to it. You can move once your lease is over without any of the difficulties that come with selling a home. Rent in New York commonly already includes utilities which makes budgeting easy without as many variables. Renting also allows you to budget and save money, buying a home involves a down payment which can take time to save up. Credit is also a very important factor in obtaining financing and making on-time payments will aid in having a desirable credit situation.
One of the biggest reasons why inhabitants of a city decide to buy is to obtain equity. Equity is the ownership someone has in a home which increases with every payment made which is the opposite of renting. It doesn’t matter if you’ve paid your rent on-time for 10 years in the same unit, you could move on the 11th year and not have any rights or claim to the property. Once you’ve paid off the mortgage, you can use the home as equity to finance and fund major payments. Your house, your rules; commonly in rentals the landlord will outline what you can and can’t do as far as decorations, improvements, and even pets. When you own a home the only things you will be subject to is the law, of course, and any HOAs bylaws you’d need to obey. A home for some is truly considered an investment that allows them to decide if they’d simply like to live in it or be creative and use their home or land to generate additional income. At the end of the day, there are a variety of choices you can decide to make as far as the type of home you’d want to buy, the location and your price range; however, laying out a future and how your home will benefit that future is a main factor when making a decision so make a budget, create a 5-10 year plan, and start saving!