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Renting Vs Purchasing a Home



 

So are you trying to decide between renting and buying in Northern Virginia? Let's go through the pros and cons of each. I am Kat Massetti with The Haven Group | eXp Realty, and I am a Fairfax county resident and have lived in Northern Virginia, almost all my life.


If you're thinking about renting or buying, there's a couple things that you need to consider. Number one is how long are you going to stay in the area? In Northern Virginia, it typically takes about two to five years to break even on your investment. Northern Virginia is an expensive area to get into, but think of it as an investment. This is why people park their money here, but it's a longer term investment. It will appreciate in value over time, about 3 to 5% per year. So when you're considering renting or buying, you have to think about how long are you going to stay here? If you're planning on staying here for less than two years then I would say renting is probably the better option for you just because you're not going to give yourself enough time to accrue the appreciation or to see the benefit of investing your money.


Number two thing that you need to consider between renting and buying is do you have the investment to purchase? In Northern Virginia, typically closing costs are about 2-3% of the sales price and you need a down payment to purchase a house. So average sales price in Northern Virginia is about $400,000. 2% is going to be $8,000 and then you need the down payment as well. You can get a loan for about 3.5%, which then means that you will need about a $20,000 investment at least if you are considering purchasing an average home in Northern Virginia. There are a lot of first time home buyer programs to can help you get into properties if you need to. That's something that I can help you with as well. I can connect you with a lender that can talk to you about first time home buying programs.


The third thing that you should consider between renting and buying is the fact that when you are a renter, you're paying your mortgage to somebody else. Your rent money is going to the landlord and it's paying for their mortgage. Consider whether you want to be paying somebody else's rent or do you want to take that equity and become a homeowner and start paying for yourself and for your future?


Another thing to consider when you're talking about renting versus buying a home is the tax ramifications. As a homeowner, you do have the benefit of being able to write off the interest for taxes. On the homeowner side, you are going to be able to get tax deduction for the interest, but on the flip side, as a renter, you don't have to cover the property tax. That's what the landlord is going to do with their mortgage. However, you just have to outweigh, do you want to continue to pay for somebody else's mortgage or do you want pay for yourself and get the tax benefits as well?


Another thing do you want consider when you're talking about renting versus buying is the fact that as a homeowner, there are joys of home ownership and what are those joys? Those joys are maintenance. Something that you have to consider when you’re looking to become a homeowner is also saving for those inevitable fixes that you're going to have to do to maintain your house. Repairs, such as appliances, or are replacing windows, roofing, etc. As a renter, that's going to be somebody else's problem, right? Renting is a more of a low maintenance way of living. You could say if you're renting because the landlord's going to take care of the repairs, but you know, on the flip side, the landlord owns that property. When you leave, you have nothing to show for it.


Those are of the things that you need to consider when you're just trying to decide between renting and home ownership. With the renting, nothing to show for at the end of the day, possibly, but with home ownership, you're able to take that equity and build wealth. If you want to talk more about renting versus home ownership, or if you have another questions about real estate in general, reach out and I'd be happy to help you!

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