When should you buy a house? The answer is different for everyone. If you’re currently renting but hope to become a homeowner in the future, this simple guide will help you understand when the time is right to buy your own house.

The Pros and Cons of Renting

Finding a place to live is a major factor in our personal stability and happiness. Naturally, as a mortgage lender, we believe in the overwhelming positive change that owning your own home can bring to your life. However, while there are many financial benefits to homeownership, renting can be a good solution for some people.  

The positive aspects of renting include:

  • Flexibility: If you aren’t sure where you’re going to end up living in the next few years, renting can be a good way to keep your options open. For example, when you’re brand new to an area and don’t know which neighborhoods you’ll like best, renting briefly while you explore the city can be useful. 
  • Relatively low commitment: Most landlords require tenants to sign a lease, either for a year, six months or month-to-month. This represents something of a commitment, but even a year is a relatively short period of time. Additionally, though landlord-tenant laws vary from state to state, many states (including Oregon, where we’re headquartered) allow tenants to break a lease with notice. 
  • No need to worry about upkeep: In most cases, landlords are required to perform maintenance on their properties. When something breaks, you can just call someone and they’ll take care of fixing it. If you end up with a good landlord, this can be a major plus.

That freedom and flexibility can be nice, but they aren’t everything, and in fact there are some ways in which they’re a double-edged sword. The potential pitfalls of renting include:

  • Lack of certainty: The fact that renting is so low-stakes commitment wise can lead to unexpected abrupt changes. Landlords can evict you or terminate your lease, sometimes without cause, and typically without more than a month’s notice. That can leave you scrambling to find a new place, and this can happen at any point. The rental property owner usually will work on their own schedule rather than taking the tenant’s needs into consideration.
  • Reliance on others: Landlords get to make judgment calls on things like what counts as “ordinary wear and tear” when evaluating whether to refund your security deposit. Plus, their approach to maintenance and repairs may not be up to the standard you’d prefer. It can be luck of the draw on whether your landlord is fair or not.
  • Lack of investment: Whether you rent or buy, you’ll need to spend money to keep a roof over your head. When you’re paying rent, that money goes straight into another person’s pocket and doesn’t add value to your personal finances. 
  • Annual rent increases: Unless you’re lucky enough to live in a place with amazing rent control laws, your landlord will probably raise your rent as often and as much as they can. That means that your cost of living can change unexpectedly.

How Homeownership Can Make Life Easier

Renting isn’t a harmful decision, but it’s also not necessarily something you should do if you’re financially capable of owning a home. Homeowners have a lot more security and control over their living situation, and they can also build equity by paying off their mortgage. That equity can then turn into a source of funds for things like renovations to increase your home’s value or make it more liveable. Plus, with options like fixed-rate mortgages, you could end up with a steady and reliable mortgage payment every month. Removing the uncertainties associated with renting can be a major benefit, especially if you’re settled and don’t intend to move anytime soon.

There are some less serious but still impactful benefits to homeownership as well. For example, many landlords don’t allow their tenants to paint their walls or otherwise make changes to the property. Landlords may even have restrictions on things like your ability to put nails in your walls or plant flowers outside your window. While some homeowners have to deal with HOA rules that restrict what they can do to their home’s exterior, those rules usually don’t impact interior decor. You’ll have a lot more freedom to make your space look and feel the way you want it to.

When to Buy a House After Renting

Certain economic climates are more beneficial for homebuyers than others. Low interest rates, for example, can really increase your purchase power and enhance your budget. However, interest rates and the housing market tend to fluctuate along with the ups and downs of the economy more broadly. It’s hard to predict what’s going to happen from one month to the next. If interest rates are really good one month and you wait hoping they go lower, you could find that they actually go up.

In other words, it doesn’t make sense to wait for the perfect market conditions in which to buy a home. Instead, you should think about your personal situation and how homebuying can benefit your lifestyle and finances. 

The “right” time to upgrade from renting to owning is entirely unique to each individual buyer. For example, let’s say you just got a promotion with a major raise and a contract that means you won’t be moving anytime soon. Or maybe you’ve been saving and paying off debt for years and have dramatically improved your credit score. Perhaps you have a baby on the way and want space for a nursery. These are all great reasons to think about buying—everyone’s motivation is different. 

Ultimately, it’s really a question of finances and stability. And your finances don’t have to be in perfect health for homeownership to be the right choice. The best thing you can do when you’re starting to think about homeownership is to get in touch with your local Directors Mortgage branch and have a conversation with a Mortgage Specialist. They can help you determine what your options are and whether homeownership is the best choice at the moment.

Ultimately, it’s really a question of finances and stability. And your finances don’t have to be in perfect health for homeownership to be the right choice. The best thing you can do when you’re starting to think about homeownership is to get in touch with your local Directors Mortgage branch and have a conversation with a Mortgage Specialist. They can help you determine what your options are and whether homeownership is the best choice at the moment.