Whether you’ve come to a place in your life where you’ve outgrown your current living situation, need a job, or want to move to a better school district, you know you need a new home. After years of renting, you may feel you’re ready to purchase a home, but you have some hesitation. Can you afford the mortgage? Will you be able to keep up with home repairs? How will you pay the property taxes and homeowner’s insurance? Will the housing market soon collapse?
It’s no wonder that given all the uncertainties of buying a house for the first time, many people continue renting. After all, your landlord needs to handle all the repairs, taxes, and property insurance, your monthly housing expenses are fairly consistent, and you don’t have to worry if home values go down. But you’re also limited in when you can do in the home as far as customization and may face rent increases when you renew your lease.
Whether buying or renting is right for you, choosing a new construction home in Pennsylvania should be a priority. With these properties, you can rest assured that the home is in compliance with today’s building codes, and you don’t have to worry about the condition a previous occupant left the house. Learn more about the pros and cons of renting and buying, and then get in touch with us to find your dream home.
When Is It Better to Buy a Home?
Buying a new construction home in Pennsylvania is a smart choice for people with steady employment, decent credit scores, and money saved for a down payment. Owning a home is part of the American Dream, and it can bring with it a sense of pride and satisfaction. You’ll be able to make changes and additions to your home as you please and could even reap some tax benefits, like the home mortgage interest deduction. You may also make a nice profit when you sell your home by building equity in it.
However, if you can’t keep up with your mortgage payments, you risk the bank foreclosing on your home. You may not always be able to move when you want since you’d have to find a buyer for your current home. In addition, you’re also responsible for all repairs, utilities, insurance, pest control, taxes, homeowner’s association (HOA) fees, mortgage interest, and much more.
When Is It Better to Rent a New Construction Home in Pennsylvania?
If you’re working on bringing your credit score up, saving for a down payment, or you’re thinking about a career change in the future, renting may be the better option for you. You’ll still be responsible for your security deposit and monthly rent, but property taxes, home insurance, and repairs aren’t your responsibility. Additionally, some rent even includes things like utilities, storage, and HOA fees, making it even easier for renters.
However, your rent payment isn’t helping you to build equity like it would in the case of buying a home. You also don’t have control over whether your landlord decides to increase your rent or if they sell your home or apartment, forcing you to find a new home sooner than you were ready. Your lease also binds you to pay monthly rent for the specified length. If something comes up and you need to move, you’ll have to pay hefty fees to get out of the lease.
What is the 5% Rule When Comparing Renting vs. Buying?
As you research the benefits and disadvantages of buying and renting new construction homes in Central Pennsylvania, you may have heard the term “The 5% Rule.” This is a term used by a Canadian portfolio manager named Ben Felix that helps some people decide whether they should buy or rent a home.
For example, let’s say you are considering a home with a value of $350,000, but you found a single-family rental home for $1,700 a month that would also work. The 5% Rule tells you to follow these steps:
- Multiply the value of the home by 5%. In this case, we’re looking at $17,500.
- Divide that number by 12 to get a breakeven point, where renting is financially equivalent to buying. For our $350,000 home, the breakeven point equals $1,458.33.
- If the breakeven point is higher than the monthly rent of a comparable home, it makes sense to rent.
- If the breakeven point is lower than the monthly rent, it makes sense to buy.
In our hypothetical situation, it would make more sense for you to buy the home since the breakeven point is lower than the cost of renting.
Is It Better to Rent in 2022-2023’s Housing Market?
Increased mortgage rates and home prices have scared some potential buyers from purchasing real estate in 2022. As we close out the year and look toward 2023, many people wonder if renting is the better option. The answer depends on your situation and where you want to live.
For our customers in the Harrisburg, PA, and York, PA areas, single-family homes are in abundance. Whether you buy or rent, you can find a home that works for you. So, the issue comes down to three questions:
- Can you afford the costs associated with homeownership? Consider everything we’ve discussed up to this point, including utilities, repairs, and other fees besides your mortgage.
- Are you planning on staying in the same area for the foreseeable future? It may not be worth investing in homeownership if you move out of the area in a few years.
- Are you particular about your customization options? If so, buying may be better since you can control the space.
Ready to Buy from a New Home Builder in PA?
Buying a home is one of the largest purchases you’ll make in your lifetime, so it’s wise to consider all facets of this endeavor. If you decide buying a home is right for you, contact the premier new home builders in PA—Burkentine Builders!
We make the new construction home-buying process easy in Pennsylvania and can help you walk through it. And if you ultimately decide that renting is better for you, our sister company, Burkentine Rentals, can help you find your next home! Get in touch with us today to get started.