The rising cost of rent in Boston (and the suburbs, for that matter) has caused many people to consider homeownership earlier than they had originally planned. We’ve rounded up some pros and cons for each side that should help you make what could very well be the biggest financial decision of your life.
- Flexibility. Obviously, renting is favored if you are looking for more freedom. If you are not yet settled into a career or would possibly like to relocate in the future, its probably best that you continue renting until you know what you want. However, it’s important to note that as a homeowner, you can choose to rent your property out and live elsewhere. This is especially convenient in the Boston area with countless students and property management companies to make the transition easier.
- Stable monthly payments. Should you choose a fixed rate mortgage or an extended adjustable rate mortgage (7 year is a good option), your monthly payment will be consistently the same. The only moving pieces to be aware of are your property taxes and condo fees for condos. On the other hand, you can almost guarantee that your rent will be going up consistently year to year.
- Unexpected expenses. Maintaining a home can be surprisingly costly, and you can never tell when you’ll need to drop a lot of time and money into it. Perhaps a large appliance breaks or your boiler starts acting up and it needs to be fixed or replaced. For condo owners, assessments for big ticket items can add up to several thousand dollars depending on the size of the association and the expense involved.
- Limitations. We mentioned flexibility earlier, but there’s another side to that coin. Renting can sometimes prohibit certain activities, like painting or allowing pets. When you own your own home, you’re free to make any changes you like to your living space and the result is liberating.
- Equity. Arguably one of the most favorable points of buying a home is the fact that you are building equity every month. Renting doesn’t amount to anything tangible or usable in future transactions. For example, you can borrow against your equity or refinance your home to help you pay for a large acquisition.
- Appreciation. A recent Boston Magazine article pointed out that over the past 10 years, Brookline overall has appreciated 50% and Cambridge a whopping 92%! Just over the past 12 months, condos in Brookline have appreciated around 10%. That’s how people building wealth with real estate ownership.
- Resources. The New York Times has a great rent vs. own calculator you should check out if you’re weighing your options. Check it out here.