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The decision to rent versus buy in Seattle in 2021 can be a difficult one. After all, when you rent, you’re paying someone else’s mortgage. But when you buy, there are other expenses that need to be paid in addition to your mortgage.
To buy or to rent a home in Seattle 2021? That is the question. Unfortunately, since there are so many factors to take into account, there’s no one universal answer out there to give you.
There are pros and cons to each opportunity, and as your local Seattle mortgage company, we wanted to shed some light on the topic. We’ve broken down the reasons to choose each option, and then give you our final overall answer in the conclusion.
Before we dive in to reasons why buying may be a better idea, it may be helpful to understand why some people may want to rent. Here are some potential benefits to renting:
When we’re comparing upfront expenditures, renting is favored over buying. In most cases, considering the purchase of the home itself with the down payment and closing costs, renting can be more affordable, at least in the short term. If you need a place to live and don’t have decent sized cash reserves beyond making a rental deposit, renting may be a decent option.
There can be extra costs of homeownership that you wouldn’t have to worry about with renting, such as property taxes, maintenance, and repairs. With renting, you don’t have to worry about that stuff or take on any of the financial burdens of home maintenance. Just call the landlord and he or she will deal with it.
If we’re making considerations in the short term again, renting can provide more flexibility with your way of life. If you don’t plan on being in one place very long, being a renter gives you the freedom to make quick, last minute lifestyle changes. It’s a lot easier to pick up and move after your lease is up rather than having to go through the effort and work needed to sell your home and buy a new one.
You also have more liquidity with renting. Most homeowners put a large chunk, often the majority of their savings into their real estate purchase. In this case, a lot of your money is tied up in your investment, making it difficult to get to quickly. Renting can provide you with more flexibility and other investment options.
While there may be an argument to be made in favor of renting over buying, there are also some great reasons why purchasing a home in Seattle may be the better way to go, and here are some reasons why:
According to Zillow, the median asking price of rental properties in the US is $1,933 per month, according to Rent Cafe. Compare that to a mortgage payment on the median-priced home of $725,000, according to RedFin, and the monthly price would be $2,369 based on a 20% down payment and today’s current 30-year fixed-rate mortgage rate.
That number is a bit higher, but given the costs of homeownership such as maintenance, taxes, and closing costs, it’s hard to argue in favor of renting in that situation.
Historically speaking, rent has risen 5% each year. However, when you’re buying a home, you can lock in the same monthly cost for a long period. So even if your rent would be the same price as your mortgage today, it’s likely to become more expensive in the future.
Envision you’re paying the same price for your home each month for the next 30 years while other rental rates are increasing. When comparing the two options over the long term, it’s pretty favorable to buy.
Even if it is less expensive in your area, renting a house means you’re paying for someone else’s investment each month. If you’re buying your home instead, you’re building the equity in your property and growing your wealth. You’re increasing the value of your asset every time you make a mortgage payment.
You’re also investing in your home. When you buy property, you get the pride of ownership that comes with it. Everything you work on or add to the real estate is essentially an investment. By making improvements to your way of living you’re also improving the value and condition of your home.
If you own your home, you can deduct numerous expenses related to your property from your taxes. Even the interest on your mortgage can be deductible in many cases. Considering how much we pay in taxes each year, a significant portion of your income could be going towards your investment rather than to the tax man.
If you have some savings and plan on staying in one place for the new few years, in most cases, buying is a much wiser choice for the long term. With rental rates on the rise, your future self will thank you for making the present-day decision to invest in your home purchase.
Are you curious about mortgages in Seattle? Sammamish Mortgage can help. We are a local, family-owned company based in Seattle and Bellevue, Washington and serve the entire state, as well as the broader Pacific Northwest region, including Oregon, Idaho, and Colorado. We are pleased to offer many mortgage programs to our valued clients, and have been doing so since 1992. Please contact us if you have mortgage-related questions.
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