Rent vs. Buy: The Pros & Cons of Buying a Home in Colorado
After years of renting a space in Colorado, you might be thinking of buying your first house instead. And why not? If you’re proud to call Colorado home, why not put down permanent roots here? However, take some time to consider rent vs. buy pros and cons. Factors like your finances, lifestyle, career, relationship, and location will affect whether it’s best for you to buy or rent right now.
Lucky for you, we’re here to help you consider that decision with our pros and cons list below.
Rent vs. Buy in Colorado
Pros of buying a home
Make your home your own.
One of the best things about buying a home in Colorado, especially after you’ve been renting for years, is the creative freedom to make it your own. You can remodel rooms, change light fixtures, completely redo cabinets and countertops, and paint it whatever color you like.
When you rent, your options are usually very limited, which can make it feel like the space isn’t yours. And you want your home to reflect you. Having the freedom to do what you like with it can make you feel more connected to the house as well as the community.
Build your equity, not your landlord’s.
Equity is your interest in a home, the portion of your property that you truly “own.” You are the home’s owner of course, but if you borrowed money to buy your home, your lender also has an interest in it until the loan is paid.
Every time you make a mortgage payment towards your home, you earn equity. Your mortgage goes down, and your equity rises. When you rent, you’re building your landlord’s equity instead, which doesn’t really help your finances down the road. Plus, with a fixed-rate mortgage your payments stay the same, so you’re not surprised with a price hike like you might be with rent payments.
Cons of buying a home
Money for a down payment.
Finances can often hold you back from buying a home, especially since you usually need money for a down payment. Mortgage companies typically require you to put down 3% to 5% of the cost of the home as a down payment. However, there are plenty of financing programs and down payment assistance programs out there, run either by the Colorado Housing and Financing Authority (CHFA) or available nationally. Because of the abundance of options, we wouldn’t really call this a con.
It’s easier to qualify to rent a home or apartment, and it’s a less extensive process applying to rent. However, when you sign a rental agreement, it’s usually structured for a year only. Once the lease is up, there’s no guarantee you can renew and stay in that space.
Selling can be costly.
Selling a home can be a lot less exciting and more stressful than buying a home. You’re dependent on the market, and it usually requires months of preparation to make as much money as you can when you sell. You’ll also have to budget for any necessary repairs or updates to the home before you sell, as well as realtor fees, which range from 4% to 6% of your home price.
With renting, there’s more flexibility to pick up and move easily if you find a better place. However, rent prices have been rising for years. It can be tricky trying to plan how much you’ll need towards future rent payments.
Every system and structure in your home is your responsibility. If the heating and air conditioning stops working, if your water heater springs a leak, or if you notice your refrigerator needs to be replaced, it’s up to you to fix it. When you rent, your landlord usually takes care of maintenance issues, though it can be frustrating if they don’t get repairs done quickly or to your satisfaction.
If you’re the handy type, having maintenance responsibilities for your home isn’t really a con. You also have the freedom to pick your replacement appliances and choose who to hire to make repairs.
Rent vs. Buy: What’s the verdict?
Renting a home and buying a home each has its own advantages and disadvantages. If you’re not sure what your career, living situation, or finances will look like within the next year or two, it might be better to rent until you’re more stable.
However, if you know that Colorado is where you want to be and your life seems set for the long-term, investing in your own home makes more sense than renting. The benefits of buying a home far outweigh the benefits of renting: you put money towards a home that you truly own, you build equity, and you can put down roots in a neighborhood that you love.
When you’re ready to start house hunting in a community between Denver and Golden, come to West Line Village. West Line Village makes it easy to commute to work and experience the outdoors. Learn more about the West Line Village neighborhood now!