Renting vs. Buying: Which is a better Financial Decision?

Is renting or buying a home a better financial bet?  

Statistics show that buying is still significantly cheaper, than it is to rent. Not only in Minneapolis/St. Paul but also the surrounding suburbs. That will remain true as mortgage rates stay low, and rental rates continue to climb to record levels.  

Minneapolis-St. Paul Rental Stats for 2016: (Jan-Mid October) 

1-2 Bedrooms $1,742/Month
3 Bedrooms    $1,940/Month
4+ Bedrooms  $2,495/Month

Signs are pointing towards rates to keep rising throughout the end of the year into 2017.  

Minneapolis-St. Paul Home Buying Stats:

*All mortgage amounts based off of a 3.625% Interest Rate, a 3.5% Down Payment. Including Principle, Interest, Taxes, Insurance & PMI. (No information is guaranteed as taxes/insurance vary widely)

1-2 Bedroom Homes: Median price $160,500 - $950/Month
3 Bedroom Homes: Median price $215,000 - $1,300/Month
4+ Bedroom Homes: Median price $301,050 - $1,725/Month


Renting

Pros

• Renting allows to you move around frequently (No long-term commitment)
• Establish credit, or repair damaged credit
• No mortgage worries if your income isn't stable

Cons

• Paying a landlord instead of yourself (Building Equity)
• No control over rent fluctuations
• Inability to make any changes to the house without the landlords consent
• Trouble with children, source of damage to the standpoint of landlords
• May not allow pets
• No guarantee that the lease will be renewed when it expires
• More Expensive 

Buying

Pros

• Allows wealth creation as you build equity
• The value of a home will appreciate over time
• When you buy a home you have greater freedom of its use, rather than being restricted by a landlord
• Saving money over the long term with tax deductions
• Option to refinance if rates were to change in your favor, or to withdraw a large amount of money for a large purchase

Cons

• Huge financial responsibility 
• Additional costs, such as repairs, taxes & Insurance 
• Less mobility (Having to sell your home before you can move)

There are certainly many pros and cons for either side.  Hopefully this will help you prepare you for one of the largest financial decisions of your life!


If you have any other questions about the buying/selling process, or would like a recommendation on a couple Mortgage Lenders to help you find out what you can afford feel free to contact me.  I would be happy to help answer any questions you may have.  Email: Scott.Swennes@results.net  Call/Text: 763-331-4775.  

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Cell: 763.331.4775

Email: Scott.Swennes@results.net