Should You Buy or Rent in McAllen TX?

Should you buy or rent a house?

The answer depends on different factors including your savings account, home affordability, lifestyle, and family needs. If you are single and earning a good income, then you can rent a property but purchasing a home may prove to be a valuable investment. Opposite to that, most parents prefer buying because they are raising a family. Some people choose to buy because they want their own place. Other people opt to rent as they want more freedom and do not want to take responsibility of owning a home.

Before you decide the answer, you should consider these 5 points.

What’s Your Credit Score?

You do not necessarily need a credit score to rent a home, but you will need it for a mortgage plan. A great score can help you save thousands of dollars on mortgage payments. Bank will approve your loan in a fast manner with fewer interest rates, and you get to negotiate your terms with the bank. You can get a free credit report from any of the national credit bureaus including Experian, TransUnion, and Equifax. So, if your credit score is between 720-850, you should consider purchasing a house. However, if your score is below the 720 mark, it is time to increase your score.

Compare Renting Vs. Buying in McAllen  TX

Local markets vary so before you make a decision, it will be worth inquiring a realtor about the average rent and mortgage payments in your area. As of July 2016, the average rent for a two-bedroom apartment in McAllen is $864. The median rent price is $1300 which is slightly higher than the state average. Right now, market statistics favor buying in McAllen TX.

Here is how can you calculate the solution for yourself.

Median Value of a Single-Family Home $121,300
20% Down Payment $24,260
Estimated Monthly Payment for a 15-Year Fixed Mortgage $718
Median Rent in McAllen TX $1300
Mortgage Interest Rate 4%

Looking at this calculation, it is evident that you should purchase your dream home than renting any property. You can get started with a down payment of as little as 3.5%. Even with a small down payment, you can pay the entire loan in 15-years. Did you notice, that I have compared the monthly rent with a 15-year plan instead of a 30-year fixed mortgage?

Note: These calculations are a sample. Individual costs may vary. Please contact us for more details.

Property Maintenance Costs

Homeownership gives you tax benefits, but it also comes with a few costs. Each year, you will be spending 1%-3% of your home value on repairs and fixtures. Every 3-5 year, you will need to upgrade your house. Not to mention, the hassle of maintaining your own home.

If you are renting, you are not responsible for property maintenance or repairs.

Will You Pay for the 20% Down Payment?

You know, you are ready to buy a home when you can pay at least 20% down payment for your home. A big down payment reduces your monthly mortgage payments. You get a 20% equity share in your house and you have higher chances of getting your application approved.

How Long Do You Plan to Stay in Your New Home?

If you have no intention of staying in the same place and you will move out in next 18 months, then buying is not the right decision. Ideally, you should purchase a house if you plan to stay for at least five years. On an average, people spend nine years in the same home.

End of Story: Many of us buy a house because “we should.” However, homeownership is not an obligation; it is a dream. Think about your long-term plans and financial goals before choosing between renting and buying.

Photo Credits Owen Moore Via Flickr Under CC 2.0 & Home Water Softener Reviews