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buy a home in NJ, Renting

To Rent or to Buy a Home in New Jersey: The Financial Implications

Homeownership in NJ can seem like a pipedream to some people. A chaotic real estate market, higher than average home prices, and rising interest rates can turn would-be homeowners off. Before you decide, always take the time to weigh the financial benefits of homeownership.

On Behalf of Veitengruber Law | Aug 31,2022

One of the more common real estate questions we get asked, especially in the past two years, is: "Should I rent or buy?" For many, homeownership seems like a pipedream. A chaotic real estate market, higher than average home prices, and rising interest rates can turn would-be homeowners off from purchasing a home. However, before you decide to rent instead of buy, you should take the time to weigh the financial benefits of homeownership. 

1. Monthly Payments

When you rent: Your rent generally goes up every time you sign or renew your lease. Especially with the rising value of real estate in recent years, rent is higher than ever—and predicted to get even higher. As a tenant, you cannot control how much your rent increases. While you can attempt to negotiate with your landlord, it's their prerogative to raise the rent regardless of market conditions or what might seem "fair."

When you buy: You have more control over your monthly living costs. Signing a mortgage agreement can lock in a monthly payment for 15-30 years. Even with changes in your property taxes or minor shifts in escrow payments, you can expect a similar payment over the vast majority of your loan. This monthly cost could fluctuate more if you have a variable interest rate. However, your interest rate will likely increase or decrease at a slower rate and is based on market conditions instead of the whims of a landlord.

2.   Increase Your Assets and Net Worth

When you rent: Renting means you miss out on the significant financial benefits of homeownership. Not only will you pay a premium to live in a rental space, but you also won't see any benefits from those payments. Your rent goes towards securing and growing an asset that belongs to your landlord.

When you buy: When you own a home, every payment you make goes towards growing your investment and building up your assets. When the value of your home increases, so does your return on your initial investment. Homeownership is one of the best ways to increase wealth and secure your financial future.

3.   Grow Your Savings and Equity

When you rent: Renting limits your ability to save. As rents rise, you will be paying more for housing, leaving less for you to put into savings. This can make it harder to handle sudden financial emergencies and prevent you from saving up for big purchases and life events—like the down payment for a home or retirement.

When you buy: Every payment you make builds equity in your investment. Your home is often the most significant investment you will ever make. As your home grows in value and your equity increases, so will your net worth. The more equity you have in your home, the more options you will have for making other big investments in your life: like taking out a HELOC loan or selling to finance the purchase of a bigger property.

Buying a home comes with unique legal challenges. If you decide to take the big leap into homeownership, Veitengruber Law can help. We can help ensure you are protecting your investment.

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Phone: (732) 894-4909

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