The U.S. Census Bureau reported that the national homeownership rate was 65.4% in the first quarter of 2022, meaning roughly two-thirds of Americans are homeowners. Over the past two years, it has seemed as though the entire other third of the population has been rushing to buy a home due to historically low mortgage rates and fierce competition.
Undoubtedly, purchasing a home in Salt Lake City is a significant life decision. However, is it the best choice for you? There is no one right answer because renting or buying in Utah have key benefits and drawbacks that should be considered before making a decision.
If you're unsure whether to rent or buy, keep reading to learn factors to consider before making a decision.
Buying a Home in Utah
Purchasing a home in Salt Lake City can be a wise financial decision if you have a sizable down payment. You gain a sense of stability and self-worth, improve your credit, earn equity, and exercise complete control when you purchase a home in Utah.
Your ability to repay various loans, including your mortgage, has an impact on your credit score. You can improve your credit score by making on-time payments on your home mortgage.
The capital you have invested in an asset is known as equity. You can build equity by consistently making on-time mortgage payments, which you can use as leverage for larger future investments. For instance, if you have already paid $100,000 for a $600,000 home, you can leverage $100,000 in equity to purchase another rental property in Utah.
Homeownership in Utah gives you a great deal of freedom. For example, you can choose to increase the worth of your home by renovating or repainting the walls. These home improvements can increase the home value.
You may also decide to purchase a duplex in Salt Lake City, where you can combine your jobs as a regular homeowner and landlord to provide a reliable second source of income.
Renting a Home in Utah
Renting often seems like a waste of money since you are not building equity. In actuality, renting is known to enable residents to affordably "trial run" in a particular location.
Here are a few top reasons for renting a home in Utah:
Renters are given a great deal of freedom. When renting a home, your commitment to the place lasts only as long as your lease agreement does. Additionally, renting allows for a great deal of mobility.
Fewer Upfront Expenses
When you rent a home in Utah, your move-in costs are usually significantly less than the down payment and closing costs required to buy a property.
In addition, the amount you pay in rent each month may be higher or lower than a mortgage depending on your particular situation. Nevertheless, you can count on a consistent bill each month of your lease.
When you are renting a home, you are typically not responsible for paying for repairs to the property. It is the responsibility of the landlord and Utah property management company to maintain the investment property. Instead of coordinating any repairs, you are usually only required to report the issue to the landlord or Utah property management company.
How to Decide Whether to Buy or Rent a Home in Utah in 4 Easy Steps
Calculate The Costs Of Buying Vs. Renting
Renting can often be less expensive than purchasing a home in Utah due to the up-front costs involved, which includes the down payment, moving expenses, closing costs, renovations, and other maintenance jobs.
In addition to the upfront costs, you will need to determine all other monthly or yearly expenses associated with owning the home. You'll may be responsible for paying homeowners association (HOA) fees, property taxes, homeowners insurance, and (in many circumstances) mortgage insurance on top of a monthly payment that is more than the principal and interest on your mortgage.
On the other hand, purchasing a home in Utah is almost often less expensive in the long run and it gives you the opportunity to build equity. When you decide to sell your house, hopefully, its value will increase.
Putting Down Roots or Mobility—Which Is More Important To You?
It might be difficult to predict what will happen next in your life, even with the greatest of intentions. Purchasing a home in Utah makes the most sense if you want to remain in one location for an extended period and have the financial resources to do so.
However, it's critical to assess your present condition and consider whether you believe that it will change over the course of the next few years. If it does, your housing needs may also change, in which case you might wish to delay purchasing a home.
Compare The Risks Of Buying And Renting
You should consider all of the risks when deciding to rent or purchase a home in Utah. When you purchase a property, you can build your equity, but there are also certain financial risks. For instance, you might not be able to recover the expenses of closing costs or renovations if you sell your house earlier than planned.
On the other hand, renting implies you will never have the chance to accumulate wealth through equity. In addition, you never know when the landlord or Utah property management company will increase your rental rate.
Evaluate your Financial Position
It's crucial to remember that while choosing between renting and owning, you must be realistic about your financial condition. Once you have calculated the costs of renting versus purchasing, be sincere about your ability to pay other up-front costs such as a down payment, repairs, moving expenses, and purchasing new furniture.
Do careful budgeting in either scenario to ensure that you can afford to buy or rent regardless of your decision.
The Bottom Line
The answer to the question of whether to buy or rent a home is not always clear. In the end, the choice between renting and owning a home is a personal one.
You must consider your present financial resources as you decide whether to rent or buy a home. Your wish to buy a home shouldn't come at the expense of being able to save money and make wise investments.
If you're ready to start the next real estate journey, get in touch with us for all your needs.