Rent or Own – Three Things to Consider Before Buying

Rent or Own – Three Things to Consider Before Buying

Rental prices in Denver increased three times faster than the US average in 2015, forcing many renters to look at the virtues and savings of purchasing their own home. For many who did make the transition, the difference between renting and owning, even with the increased expenses like insurance, taxes and utilities, turned out to be a more economical way to live.

While the momentum of rental price increases slowed in 2016, rents continue to creep higher, keeping the pressure on to purchase. But the cost savings does not always justify making the move to ownership. As a renter, here are three things to consider before making a purchase.


First, how is your credit? More specifically, what is your credit score? The type of loan you qualify for, and the interest rate you are going to pay will be based on your credit score. When you are thinking about purchasing a home, start the process early and contact a mortgage lender who can pull your credit and tell you exactly where you stand. You many need some additional time to clean up some credit issues before moving forward with your loan.

Be Financially Prepared

There are a lot of expenses that come with purchasing a home. Many of the costs can be rolled into the loan, but there are a couple of items, like earnest money and home inspection fee, that will require cash up front. It is also possible that the home you purchase does not come with appliances. Add those to your list of initial outlays.

Depending on the type of loan, there will most likely be a down payment required. VA loans for people who have served in the military require no money down, but have some restrictions. An FHA loan is a government backed loan that will typically require 3½ percent of the purchase price as a down payment and conventional loans can require up to 20% down.

There are down payment assistance programs that will grant a large portion of the down payment, but there are additional fees and higher interest rates that make these programs more costly in the long run. Having your own cash to put down is always better than an additional loan or grant. Plus, in a strong seller’s market like we have in Denver today, sellers will choose offers that don’t have a lot of potential pitfalls.


Determining whether renting or owning is also based on your timing. There are a lot of costs in buying and selling a home, and if you have a short-term timeline, or plan to buy then sell soon afterwards, renting may be a better option. Many of the up-front and one-time fees can only be recouped over time.

In the current Denver real estate market, give yourself plenty of time up front to find and get a contract on the right home. Today, there is a tremendous amount of competition in certain price ranges, so it may require putting offers on multiple properties before you get the home you want.

Owning isn’t always right for everyone, but it can have advantages over renting. When getting ready to make the transition from renter to owner, leave yourself plenty of time, have money in the bank, and be prepared to settle any old issues that may be pulling your credit score down.


Jim Brown is a Realtor® and agent success leader at Private Label Realty in Denver, Colorado. He advises, assists and mentors agents at all levels to help them succeed and grow their real estate business.