With so much discussion about mortgage costs going down in 2024, is it better to buy now or continue renting until interest rates have fallen below 4% or 5%?
Delaying a decision until mortgage costs taper down comes with the risk of trying to buy as prices increase.
This list of pros and cons in the buying versus renting dilemma may help clarify your situation.
Buy now
- You’ll start building equity in your own home right from your first payment. That’s better than paying rent and helping your landlord build their equity, right?
- Be diligent in your property search. Whether you’re seeking your first apartment or house, you’ll eventually find good opportunities. Sometimes, folks sell under duress, and that’s an opening for you.
- Don’t hesitate. With rates likely to fall from mid-2024, act quickly if you see a property you love. And don’t lowball your offer if you really want it.
- Your mortgage costs are unlikely to rise further, given recent commentary from the Federal Reserve about America’s inflation rate (now 3.2%) and where it sees the cash rate moving. So, if you can afford to move now, do so.
- Don’t discount the potential tax deduction you’ll receive. You can get deductions on interest paid on mortgages of up to $750,000. Talk to a licenced financial professional about your situation.
- In a booming market, buyers are usually under pressure to make quick decisions. With folks wondering where the market is moving, time is on your side. But, if you see a property you love, don’t procrastinate.
Keep renting
- Your rent may be cheaper than a mortgage. While renting may help your cash flow, it’s still dead money. Zillow has a rent versus buy calculator to understand your current situation.
- You may have to compromise if you can’t afford to buy the quality of home you’re renting. So, to some extent, your decision will depend on how much you’re prepared to sacrifice.
- The longer you wait to buy, the more time you’ll have to save for your down payment. That reserve will serve you well when seeking a loan, but there is a risk that prices will have increased too much by the time you’re ready.
- By renting, you’ll avoid paying property taxes and the cost of maintaining a home.