Should You Buy or Rent in McAllen?

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Are you one of the many people out there considering whether it makes more sense to rent or buy a home in McAllen? Today we are going to give you some facts and information that will hopefully help make your decision a little easier.

A lot of people have not purchased a home yet because they are uncomfortable with taking on the responsibility of a mortgage payment, which is fair. However, unless you are living rent-free with your parents, you are paying someone’s mortgage. Either your own, or your landlord’s. Homeowners pay down their own principal, while renters pay down the landlord's principal, plus a rate of return.

While rental rates continue to rise each year, a mortgage payment will remain fixed. With a 30-year fixed mortgage, you know exactly what your payment will be for the next 30 years. At the same time, 88% of property managers have raised their rental rates in the last 12 months, and there are no signs of this trend stopping. Rental rates are predicted to rise by 8% in the next year on average. The rise in rents will be at a much faster pace than projected income appreciation. This, in turn, means renters will not have enough to pay all their debts each month, forcing them to make trade-offs and cutbacks.

Historically, the percentage of your income needed to pay for a mortgage vs. paying for rent is at a much closer margin than in the past. Rent used to cost a renter about 25% of their income, while a mortgage cost a homeowner about 22% of theirs. With rising rental rates and lowered mortgage interest, the average renter now spends 30% of their income on rent, while a buyer only pays 15.3% of their income on average.

As a homeowner, your mortgage payment is a form of forced savings. It allows you to gain equity in your home that you can tap into later in life. With rent, you are also guaranteeing that equity. For your landlord.

The bottom line is whether you are looking for a primary residence or vacation home, buying may make more sense than renting. If you have any questions or are curious about how much a home will set you back in this market, give us a call or send us an email. We look forward to hearing from you!