Should You Rent or Buy a Home in MA and RI?
Consider the Finances Behind Buying and Renting
When considering homeownership, be sure to have your financial house in order. Depending on the type of mortgage you secure, a down payment of anywhere between 3% and 20% is typically required. After you buy a house, it's important to have enough financial cushion to cover all your expenses.
There are multiple theories around how much of your gross monthly income should be devoted to your MA or RI home mortgage. Some say no more than 28%, with overall debt totaling no more than 36%. But there are homeowners who exceed this threshold because they believe they will earn more money as their career grows and their home’s value will appreciate.
Owning a home means you can build equity if you hold the property long enough and it appreciates in value. You may be able to deduct interest on your taxes and your home could turn out to be a great investment if you sell it after its value increases. Please consult your tax advisor about deductibility of interest and charges.
On the other hand, renting can be cheaper. The cost of owning a home goes beyond your monthly mortgage payments. As a homeowner, you’ll be responsible for all utilities, maintenance and upkeep. Some people prefer the convenience and savings that come with the support of a landlord. Renting also enables you to invest the extra money you would have otherwise put toward your home.
Consider Your Personal Preferences
The decision to buy or rent a home also comes down to personal preferences.
When you own a home, you usually control everything, from the color of your home’s exterior to the fixtures you install. You’re also fully responsible if something breaks or needs to be replaced. In comparison, owning a condo or renting often comes with restrictions on what you can do with your property, but when it comes to maintenance, you can call the landlord.
Amenities are another consideration. Homeownership usually gives you the flexibility to customize your property with a patio, swimming pool or outdoor fireplace, which you likely won’t be able to do as a renter. Some Homeowner’s Associations have limitations, while some cities and towns have ordinances impacting things like historical locations. However, depending on the property, renters may have access to similar amenities without worrying about upkeep, since the cost of a pool, gym or valet parking is factored into monthly rent payments. As a renter, however, you’re limited in your ability to make changes or upgrades to your space.
Homeownership can also provide the satisfaction of a closer-knit community. Owning a home means you’re investing in a neighborhood, and you may feel a closer connection to your neighbors because of your commitment. That said, you’ll likely worry more about local politics that affect property and zoning, and you’ll want neighbors who respect their properties to help maintain the neighborhood’s value. As a renter, you can easily leave if you grow dissatisfied with your neighborhood.
If you’re interested in weighing the costs of renting versus buying a home, use our Rent or Buy calculator to help crunch the numbers. When you’re ready to take the plunge and buy a home in Massachusetts or Rhode Island, Bristol County Savings Bank wants to help you find the best mortgage options to fit your budget. Contact a Bristol County Savings Bank mortgage consultant to get started.