Should I Buy or Rent A Home?
June 7, 2016 2:13 pm
Decide if Homeownership is Right for You
One of the biggest financial decisions you have to make when looking for a new home is whether you should take the leap and buy a home or just rent one. Each option has its own pros and cons. This post is here to help you determine whether you’re ready for Homeownership or if renting is the better option for you.
1. Think long-term
Consider your long-term plans in deciding whether to rent or buy. How long do you plan to stay in this home? If you have a job that involves a lot of moving, then it’s better to just rent for now. Homeownership requires you to at least stay for seven years in order to build equity and recover what you spent in buying. If you’re not ready for this level of commitment, then renting is the better option.
2. Consider the cost of buying vs. renting
The state of the real estate market in the neighborhood that you’re interested in plays a part in calculating the cost of buying a home. Check with your real estate agent about the median prices of homes in the neighborhood, as well as renting and purchasing prices. Comparing the price-to-rent ratio of two similar homes can help you decide if you should buy or just rent. The higher the ratio, the more sense it makes to rent, and vice versa.
3. Can you really afford a home purchase?
Having access to ample funds is essential in homeownership. You should not only be able to cover initial costs upon purchase, but recurring, opportunity, and maintenance costs as well. Checking the state of your finances and credit rating is also crucial if you’re planning on securing a mortgage. If your credit score rating is low and you’re also paying off large debts, then you may be better off renting a home.
