I’m a Renter, But Maybe I Should be a Buyer. Pros and Cons of Buying vs. Renting

Rents are rising throughout the Mississippi Gulf Coast and you may be asking yourself if now is the time to purchase a home. Each person’s situation is a bit different, so there really is no right or wrong answer. Purchasing a home is likely the largest investment anyone will have, and it’s a great way to build long-term wealth. There are pros and cons to both buying and renting, here are a few to consider:

Pros of buying

• Paying down a mortgage builds equity as the value of the home increases. Down the road, the equity you have in your home can help you finance other things, such as improvements, additions or a remodel. When it’s time to sell your home, that equity can be used as a down payment for your next home or be used for something else. 
• Homeowners are also eligible for tax benefits in the way of deductions on things like interest paid, property taxes and improvements made to the home. 
• Owning your own home also means that you can customize as you see fit, no more landlords to approve your changes! Depending on where you live and your homeowner’s association covenants regarding exterior changes, your home is essentially a blank canvas. Enjoy!

Cons of buying

• While your principal and interest payments will remain the same, your monthly payment could change periodically with changes in things like property taxes and insurance costs.
• Home maintenance and the costs associated with repairs and upkeep become your responsibility as opposed to being a renter, when repairs and maintenance are taken care of by your landlord.
• As a homeowner, moving becomes trickier. You’ll need to hire a REALTOR and go through the home selling process. Fortunately, agents at Expect Realty are some of the best real estate agents on the Mississippi Gulf Coast. Expect Realty agents make selling a home easy. 
• When it is time to move or downsize, the value of your home may not have increased as much as you’d liked. There is no guarantee that your home value will increase as much as you’d expect, which could impact your next move and finances down the road. 

Is it a good time to buy a house?
The right time for you to buy a house does not always depend on the real estate market. The key word of that sentence is YOU, is it the right time in YOUR life to buy a home. If you’re considering buying a house and would like to explore the possibilities of buying a home in Gulfport, Biloxi or Ocean Springs, real estate agents at Expect Realty can help you determine if the time is right and help you find your new home.  

Inventory
The real estate market on the Mississippi Gulf Coast currently has a lower inventory than in the past several years, and homes have been selling quickly. One estimate indicates that the United State is more than 3 million homes short of the demand from prospective homebuyers. And supply chain issues related to the pandemic are adding to the cost and the time for a new construction to be completed.  

Prices
Housing prices on the Mississippi Gulf Coast have been consistently higher than their price last year. For buyers, it’s important to set an upper limit that’s not too high to allow for any unexpected jump in prices for things like gas or food that may impact a monthly budget. 

Interest rates
Interest rates play a key role in determining monthly payments. The interest rate you lock in for a mortgage will greatly determine your monthly payments. The Federal Reserve kept interest rates historically low during the pandemic, but now as the economy recovers, the rates are rising. Buyers are advised to “shop around” for lenders, as rate and origination fees may vary slightly. Over the course of a home loan, those small variations add up!

Can I afford to buy a house?
When determining if you can afford to purchase a home, it is important to look at how much you can afford to pay monthly, as well as upfront costs.  

Upfront costs
Prior to closing on your house, there are several expenses to consider. Your home must have a down payment, which can be as low as 3%, depending on your loan type. Closing costs can be negotiated in the offer, but do plan on paying for some, if not all. These include appraisal, mortgage origination fee and underwriting. 

Monthly payments
A good rule of thumb to follow when trying to determine how much you should spend on your monthly mortgage is to look at your gross monthly income, the amount you make before taxes. From there, plan to spend 28% or less on your monthly payment – including mortgage, property  taxes, insurance and homeowner’s association fees.

This will allow you room in your budget for other expenses, like utilities and any other debts you may have. It’s important to consider how much you can pay and still live comfortably.

If you’re considering buying a home in Gulfport, Biloxi, Ocean Springs or any of the other communities along the Mississippi Gulf Coast, the real estate agents at Expect Realty are some of the best realtors in Mississippi and can help you find a home that suits your needs and your budget.