Should You Buy Or Rent When Relocating To A New City?
Sidney Richardson5-minute read
May 22, 2023
Popular opinion might suggest that it’s a good idea to rent a home first when moving somewhere you’ve never lived before – but in reality, renting may not always be the best choice. Let’s talk about whether you should buy or rent when moving out of state or relocating to a new city for work.
The Pros And Cons Of Renting When Relocating
When you decide to move to a new city, renting a home can be a great choice. Before you can decide if it’s the right fit for your situation, you need to understand the pros and cons of renting in your new location.
Here’s why renting a home can be a good idea when you’re moving to a new city.
Renting provides the flexibility to live in a new place with a shorter time commitment than purchasing a home. It gives you the freedom to move again if you need to and the ability to test out different living spaces and neighborhoods. This can be beneficial if you’re not sure what you want in a home yet or if you’re unsure when you’ll need to move again.
You Don’t Need A Down Payment
When you move to a new city or state, you’ll have to cover the cost of the move itself. For most people, trying to save up for a down payment on a property on top of paying for their moving expenses could be hard if you’ve never had a house before. If you rent, you won’t have to worry about making a down payment on the property.
Though renting can be a good idea when you relocate to a new town, it’s not something you should enter into blindly. You need to be aware of a few of the downsides of renting instead of buying a house.
You’ll likely have to move all your things multiple times and renting tends to become more expensive the longer you live somewhere. Your money doesn’t go toward building any equity and rent could rise at any moment – in fact, according to CNN, the national median rent rose by 16.4% in 2021, a huge spike from the usual increase rate of around 3%.
The Rental May Not Feel Like Home
There can be a limited sense of stability when you rent a home. With lease terms typically ranging from a few months to a year, the space you’re staying in may not feel very permanent. Since your landlord owns the building you’re renting, they could even decide to sell it, which could leave you scrambling to find another place to live.
You Have To Follow The Landlord’s Rules
The property you’re renting may also have a whole host of restrictions. For instance, you may not be able to do any remodeling to your space or even paint your walls without the property owner’s approval. If you own pets, renting could be a problem in that regard, too – not all rental properties allow animals. These rules and restrictions can make it hard to make the space you’re renting feel like a home.
See What You Qualify For
Congratulations! Based on the information you have provided, you are eligible to continue your home loan process online with Rocket Mortgage.
If a sign-in page does not automatically pop up in a new tab, click here
The Pros And Cons Of Buying In A New City
If you’re on the fence about renting in a new place, consider buying a house when you move. Renting may seem like the easier option at first, but there are benefits to homeownership that can’t be achieved by renting.
Let’s talk about when buying a house in a new place might actually be a better choice for you – and your wallet.
You May Save More Money Buying
While renting is less of a commitment than buying a house, it might also prove more costly. Depending on the area you’re moving to as well as factors like the length of your stay there, you could end up paying more to live in a rental property than you would to own your own house. The money you pour into rent could also be better spent as an investment toward equity in a home.
Building equity gives you more options for getting cash back on your investment in the future as well as refinancing and selling. The accrual of equity from a home investment is the single largest contributing factor to creating generational wealth. Plus, the interest you pay on your mortgage may be tax deductible – a benefit renters do not have access to.
Our Rent vs. Buy Calculator can help you determine whether you should rent or buy a house in your unique situation. After entering in the potential costs of renting or buying a home in the area you are moving to, the calculator can tell you how much you can expect to pay in both scenarios going forward. In many cases, it may prove more affordable to invest in a home than to deal with the rising costs of rent.
Availability May Be Better For Buyers
Though this isn’t always the case, in some locations it may be easier to find a home to purchase than to rent – even in a competitive housing market. When renting, it’s often easier to find apartments than multibedroom family homes that are affordable and available. If you are moving with your family and have children or pets, an apartment may not be as ideal an option as a house with more space and potentially a yard.
When buying a home, you will have more freedom to find a space that works for you and your family than you would if you chose to rent. As a homeowner, you’ll also have the freedom to decorate and create a space tailored to you and your preferences.
You Don’t Necessarily Have To Stay In The House Forever
If you’re worried about having to stay in a house for a long time, should you choose to buy, don’t panic. Even if you don’t plan on staying in a house longer than 5 years, there are still ways you can make a home purchase a smart investment. If you end up wanting to move elsewhere, it might be an option to transform the home you bought into a rental property or Airbnb. This way, you’re not tied down to the property and you have the opportunity to create additional income while you find another place to live. Once it’s feasible to do so, you can always sell your house, too – and in such a competitive real estate market, it likely won’t be too challenging to find a buyer.
Though buying can be a great choice for many people when they relocate, it’s not without its downsides. Here are a few reasons that buying may not be a great option.
There Are Higher Upfront Costs
When you buy a property, you’ll have to make a down payment of up to 20% – though it could be as little as 3% – 5% for primary residence – of the home’s value and cover any closing costs associated with your mortgage before you can close on the home. Depending on your finances, those costs may be too high to bear when you’re in the middle of a large move.
It’s Less Flexible
When you buy a home, your lender expects you to make payments on your mortgage until the property is paid off in full. If you need to move again, you’ll either have to rent the property out to someone so you can cover your mortgage payments or sell it so you can buy a new property in your new locale. That lack of flexibility makes buying less ideal for people who aren’t sure that they’ll be in the same location for more than a few years.
We Offer Incentives To Help You Out
In addition to the benefits above, the Rocket Mortgage® Relocation Team also offers incentives to our relocating friends who are looking to buy a home. Should you qualify, you may be able to take advantage of specialized pricing and award-winning customer service that will help make sure your move is as smooth and affordable as possible.
The Bottom Line
Picking up your life and moving it to a new place can be an incredibly stressful endeavor. While renting is always an option, buying may be the best choice for some – and it could potentially save you a lot of money in the long run.
If you’re planning on relocating to a new city and are interested in buying a home, don’t wait. Apply online and get your initial mortgage approval before you start your home search.
Viewing 1 - 3 of 3
13 Tips For First-Time Home Buyers
Home Buying - 9-minute read
Andrew Dehan - June 09, 2023
These first-time home buyer tips will help you find the right home, secure a preapproval letter, hire an inspector and more.
How To Determine If You Should Buy A House
Home Buying - 8-minute read
Hanna Kielar - January 12, 2023
A lot of factors go into determining whether or not you should buy a house. Here’s what you need to know when making the decision to buy now, or hold off.