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Renting vs. Owning a Home

A general rule of thumb is that, if you intend to stay in your property for at least five to seven years, the costs of purchasing the home are more likely to be offset by accrued equity and increased housing value. 

With that being said, there are several factors that can make or break renting and purchasing a home. If you are on the fence, here are a few important factors to consider.

5 Considerations for Renting

1.  Bad Credit: A history of on-time rental payments can help you improve your credit

2.  Flexibility: Renting allows you to explore an area before making the longer-term commitment to home ownership.

3.  Career and Income Uncertainty: Buying makes it more difficult to move if you need to move in the near future for your job. Losing your job may also make it more difficult to pay a mortgage.

4.  Maintenance: A pipe breaks? No problem. Your landlord is responsible for maintaining your rental unit.

5.  Changes in Your Rent Payment: Your rental rate is usually locked in for a year, but after that, it can go up, making it difficult to plan.

4 Considerations for Buying

1.  Equity: When you have a home mortgage, your degree of ownership in your home—equity—grows with every payment. This equity can be used to fund other major purchases, such as your child’s college education.

2.  Tax deductions: Mortgage interest and property taxes are tax deductible, an advantage Uncle Sam doesn’t give renters.*

3.  More tax bonuses: If you meet certain requirements, the IRS won’t apply a capital gains tax on the first $250,000 in profit you make when selling your home if you’re single, or the first $500,000 if married.*

4.  Choices: You can decide what color to paint your walls or how many pictures to hang and whether you want to maintain your yard or pay someone else to do it.

Where Does a Real Estate Agent Fit into the Process?

If you are leaning towards buying a home, the name on most For Sale signs is a listing agent, who works for the seller. You need to find a buyer’s agent who will work for you, either by asking friends and family for recommendations or researching online. 

Your agent is responsible for making sure home inspections and repairs are completed, obtaining disclosures and coordinating the activities of your lender and other professionals involved in your purchase. If bargaining is necessary, your agent will be your negotiator. When it’s time to sign the

closing documents, he or she will accompany you to make sure all is as it should be.

The Next Big Step

Thinking about purchasing a home? Your next step is to determine whether or not you’re financially ready. Learn more about applying for a mortgage, and get prepared to move into your next big chapter—home ownership!

We make loans to qualified creditworthy members. Equal housing lender. NMLS #411413.

*Consult your tax professional.

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