🏡 To buy or to rent your home, that is the question

Saturday,
September 23, 2023

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The week in review

• The central bank held interest rates flat at a range of 5.25% to 5.5%. This falls in line with market expectations, while pointing to one more likely 25-basis-point increase before year end and suggesting that rates will remain higher for longer.

• The Federal Open Market Committee also updated its economic projections. The update forecast slightly faster GDP growth and a stronger labor market this year and next year compared to their June projections. Fed Chairman Jerome Powell said a “soft landing” for the U.S. economy, where higher rates tame inflation but don’t lead to a recession, was possible.

• The average 30-year fixed-rate mortgage surpassed 7.3% to match a 23-year high. That said, applications to refinance a home jumped 13% compared to the previous week, while applications to purchase a home increased 2%. However, both figures are nearly 30% lower year-over-year.

For more economic news, visit On the Money — SoFi’s one-stop-shop for news, trends, and tips!

To buy or to rent your home, that is the question

Homeownership is a goal for many Americans. But whether buying is a financially prudent decision for you depends on a lot of factors. Here is what you should keep in mind when you make your decision.

What does the housing market tell you?

As a prospective buyer, you’re at the mercy of the housing market. The neighborhood or town you’re interested in buying in might have many or only a few homes available for sale, which will affect their listing prices. Other important aspects to keep in mind are your commute, if you don’t work from home, and school districts, if you have school-age children. Depending on what the for-sale housing market in your area is like, you might even consider buying land to build a home. But a project of that magnitude comes with other considerations, including material costs and a longer timeline until you can move in.

Renting, on the other hand, allows you some more flexibility: You can pack up and move when your lease is up, and you’re not on the hook for maintenance fees. However, you might have to contend with regular rent increases, not to mention your landlord could decide to sell. Perhaps most importantly: Your monthly rent payments don’t contribute to paying down your home loan, something often referred to as ‘building equity’.

Find out if buying or renting is a better fit for you with the SoFi buy or rent quiz.

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