The answer to renting vs. buying is a very personal decision. We recognize everyone's lifestyle, finances and personal goals are different. In either situation, you will need a regular income, and the decision can greatly affect your financial health (for better or for worse). It is important to do the math. No matter your decision, the agents at CENTURY 21 Action Plus Realty look forward to helping you find your perfect home in Central New Jersey. Here are some key areas to consider to help determine which is right for your next move.
Monthly Expenses Are Predictable: Your regular monthly expenses will be straightforward when renting. You can budget accordingly on a year to year basis.
Flexibility: You will have greater freedom to travel and move. The majority of rental leases are for a period of one year, after which you may choose to renew a lease, move to a new apartment or rental home, or move to a different part of the country. You won’t need to concern yourself with selling a home. Just pack your bags and go!
Repairs & Maintenance: The majority of repairs and maintenance will be the responsibility of your landlord or property management company.
No Equity: You won’t be building equity when renting. You won’t have a home to sell. You won’t be gaining a financial return on your investment to help finance your next home.
Rent Increases: Your rent will likely increase from year to year. It’s good to understand if the state or community you choose to live in has rental control. In New Jersey, there are no statewide laws governing rent increases, but many municipalities have adopted ordinances. They range from 2%-6% per year.
Freedom & Pride: Home ownership brings a certain amount of pride. You will make decisions in landscaping the land, and all major and minor renovation projects. The tree you planted with your children during their kindergarten years will fondly be remembered by them year after year. There is also a feeling of security that grows over time, knowing the land and home belong to you and your family.
Equity: You can build wealth. The portion of the home you actually own increases over time. You will own the entire home in 15-30 years. Equity translates to money in your pocket: as long as the amount you owe on the mortgage is less than the current market value of your home. You can sell your home and have money to buy your next home (or perhaps to purchase a retirement yacht and explore the world by sea) by building equity with regular mortgage payments.
Tax Deductions: There are a number of tax deductions available to homeowners when filing personal income taxes. There are a lot of rules outlined by the IRS. They are worth reviewing, as the tax breaks can translate to thousands of dollars.
Property Taxes: Property taxes are collected from homeowners in all 50 states. They are used to fund schools, police departments, fire departments, and other governmental services. The average New Jersey property tax bill was $9,284 in 2021 (or $774 a month). You will want to consider the home’s assessed value and the property tax rate. You will need to do the math and budget accordingly.
Additional Expenses: There will be additional monthly expenses in home ownership. These expenses may include mortgage insurance and homeowner’s association fees. You will also need to budget for homeowners insurance.
Repairs & Maintenance: You will be responsible for paying for the repairs and maintenance in your home. Regular maintenance items are easily budgeted for. It is wise to maintain a rainy day fund for larger unexpected repairs not covered by your home insurance policy.
Whether you are renting a house or apartment or buying a home in Central New Jersey, we look forward to helping you with your real estate needs. Let us show you how we can coordinate your move and make the transition smooth and hassle-free. Contact CENTURY 21 Action Plus Realty today!