Rent or Buy – Which is best in 2022?

Home prices have been skyrocketing lately, which is making it harder for homeownership for many Americans.

Yet, home prices aren’t the only thing rising. Rent rates continue to increase. So how do you know which option you should choose? Well, there are multiple factors that determine whether rent or buying is best for you.

Rising Prices & Rates

Both home and rental prices have made it to the double digits. Home prices jumped 19.2% year over year in January, and rental homes for single families have gained a record 12.6% in January from 12 months prior. On top of prices, mortgage rates are also increasing.

When you crunch down the numbers, owning a home continues to be more affordable than renting, although the gap is slowly shrinking. Most non-homeowners are held back from buying a home because they don’t believe their income levels are high enough.

Timing Is Key

You need to take into account what you plan on doing, and where you plan on being in the near future. Are you looking to settle down, or are you only planning on staying in one place for a few years? If it’s the latter, it would be a better choice to rent because of the flexibility. It takes about five to seven years to recover from buying a home.

How Are Your Finances?

Home ownership comes with a lot of responsibility, and a lot of costs. When you buy a home, it will take a lot out of your pocket at the beginning. Will you have enough money in savings to cover an emergency? You should also know your monthly income. Make sure you make enough to cover your mortgage, taxes, insurance, and utilities. 

Another key that plays a major part in the mortgage and interest rate you’ll get is your credit score! Make sure you get anything you can dispute off, to ensure you have the best deal. You can learn more about how to raise your score with 850 Club Credit HERE.

If you aren’t seeing a way to pay for that monthly payment, you will have to continue renting and saving for your future home. Ways you can cut back on your spending is downsizing with your current rent or car.

Know Your Limit

With prices rising, it has never been more important to know the top house price, and mortgage payment you can handle. There is nothing more stressful than getting yourself into a house that you can’t really afford. Set a budget and stick to it. Use online mortgage calculators to find the most accurate costs of buying a home. You can check out our mortgage calculator HERE.

Remember, The Federal Reserve has indicated the interest rates will be increased six more times this year, which affects the mortgage rates. It might be better to buy sooner than later, to get the best prices. But don’t make hasty decisions that you will regret later. If you need more help on finding out if buying is right for you, you can contact us HERE!