Should You Buy Or Rent In The Brooklyn Real Estate Market?
With so many changes in the Brooklyn Real Estate Market, many ask if they should buy or rent. Unfortunately, there isn’t a clear-cut answer; it depends. Sometimes a person should rent, but most often, home ownership has many more benefits and advantages.
Whether you buy or rent now depends on your financial situation and personal goals. If you have saved for a downpayment , have an emergency fund, and are comfortable with the total monthly cost of purchasing a home, now could be the right time for you to buy. Realtor.com offers a rent versus buy calculator to help you determine if it makes financial sense for you.
Homeownership is one of the best ways to build wealth. If it feels right to you financially as well as personally, buying a home may be the best option for you.
There are advantages and disadvantages to buying a home and the same goes for renting. Understanding the advantages and disadvantages of each will help you prepare for the type of housing that is right for you.
What are some advantages of buying a home?
More Stable Housing Costs
Rent payments can be unpredictable and typically rise yearly, but most mortgage payments remain unchanged for the entire loan period. If the taxes go up, the increase is usually gradual. This stable housing cost is significant in times of inflation when renters lose money and owners make money.
Tax Advantages
Homeowners can be eligible for significant tax savings because they can deduct mortgage interest and property taxes from their federal income tax. However, this can be a considerable amount initially because the first few years of mortgage payments are made up mostly of interest and taxes.
Equity
Instead of payments disappearing into someone else’s pocket, homeowners are building equity in their homes. A home purchase is often one of a person’s most significant investments. Each year that you own the home, you pay more toward the principal, which is money you will get back when the home sells. It is like having a scheduled savings account that grows faster the longer you have it. If the property appreciates, and generally it does, it is like money in your pocket. And you are the one who gets to take advantage of that, not the landlord. You can then use this equity to plan for future goals like your child’s education or your retirement.
It is Yours!
When you own a home, you are in control. You have the freedom to decorate it and landscape it any way you wish. If you would like, you can have a pet or two. No one can pop in and inspect your home and threaten to evict you.
What are some disadvantages of buying a home in the Brooklyn real estate market?
Fixed Location
Homeowners can’t move as easily as a renter who just has to give notice to the landlord. Selling a house can take more time. If you are a travel buff, taking off for parts unknown may be in your blood. How does six months of traveling Europe sound? If you own a home, you will need to sell or rent your home depending on your plans and the length of time you desire to travel. The same goes for a work-related relocation. You may need to sell or rent your home to move to a new location.
Additional Expenses
Your monthly expenses may increase, depending on your situation. As a homeowner, you will pay more for a homeowner’s insurance policy than a renter’s insurance policy. If you are in a flood zone, you may need to pay for an additional flood insurance policy. Other expenses may include a Homeowner’s Association fee, property taxes, all the utilities, and all the maintenance and upkeep costs for the home. Often you need to supply appliances that were furnished with a rental.
Repairs
You are your own landlord when you own a home. When repairs are needed, it is your responsibility to either make the repairs yourself or hire a professional to do the work. As a renter, you may experience some inconvenience by the repair, but the landlord is responsible for fixing it.
There are also advantages and disadvantages of renting a home. Before you sign a lease, consider the following:
Advantages of renting include:
Ease of Mobility
Depending on the terms of your lease, it may be easier to give notice or get out of your lease. If you have to relocate for a job, or a travel adventure you may be able to move ahead faster.
No Maintenance
Rarely is a renter responsible for repairs and maintenance under the terms of a lease. If something goes wrong you can simply call the landlord. You may face a slight inconvenience to let in a repair person, but you don’t have to pay the bill.
Less Expense
Since you are not purchasing the lease, you will need a smaller security deposit as opposed to a large downpayment. Renters insurance is less expensive than homeowners insurance because you are only covering your belongings and not the building.
The disadvantages of renting include:
Rent Increases
Your landlord is in the game to make money. Therefore, you can expect increases because you are located in a popular location, inflation, competition or rising property values on a yearly basis.
No Financial Benefits
As a renter, you will not be able to take advantage of the tax benefits of homeownership. You will not have equity in the property or profit from the property appreciation. So although you are paying monthly rent you are not making any financial gains.
Buying a home is an important decision. It is often the largest purchase a person makes in their life. Homeownership comes with some increased responsibilities that aren’t for everyone.
When considering home ownership in the Brooklyn real estate market, you need to weigh the advantages and disadvantages for yourself. Likewise, if you are like most people, you will find that homeownership is worth the risks and drawbacks.
Take the time to think through the options before you commit to buy or rent. Be sure you thoroughly understand what works best for your financial situation and lifestyle preferences.
Some helpful questions to ask when considering if your are ready to buy are:
- Have you saved enough money?
- Is there a chance of a work relocation in your near future?
- If you were relocated would you need to sell your home or keep it as an investment/rental property?
- Will you qualify for a mortgage?
- Can you afford the extra costs of homeownership?
- Are you ready to become a homeowner?
The first step to buying a home is to speak with a mortgage lender. They will review your finances and determine a maximum mortgage amount. Once you know the amount of mortgage you can qualify for and are comfortable with the monthly payment you can begin looking at homes.
If you are a first-time homebuyer you may want to read this previous blog post for some homebuying tips. Find a trusted, knowledgeable real estate professional who can help you through every step of the home buying process in the Brooklyn real estate market.
Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate, if you are considering buying a home. As a Brooklyn real estate agent with over 35 years of experience, I know the local area and market trends. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected].
