Rent or Buy? Which One Is Right For You?
You may now find yourself faced with a decision to make. Should you rent or buy a home?
A growing family, the thought of paying for something that will never be yours, tired of hearing your neighbors through the thin walls, and wanting to enjoy the tax breaks that homeowners receive are a few reasons one may consider buying a house.
However, before making such a large investment, it’s important to assess your lifestyle to see if you are really financially and mentally ready to make a commitment to homeownership.
We highly recommend that you have money saved up for a down payment, closing cost, and additional fees.
Also, have emergency money in a savings account to cover at least 3-6 months of bill payments just in case something unexpected happens.
Now, this is all recommended for your protection, however, we are not suggesting you cannot purchase a home if you do not have these additional funds in place.
Is Buying A Home The Smartest Thing to Do?
Sometimes society thinks buying a home is always the smart thing to do and look down on people who rent instead of buying a home.
However, buying a home is not always the smartest thing to do. If one is not mentally and financially ready to buy a home than it can be a bad financial decision that could lead to bankruptcy or foreclosure.
Because of this, one should really take into consideration the pros and cons when trying to decide whether to rent or buy.
Pros of Renting a House
You should also realize that renting isn’t exactly throwing your money away. You get a place to live and you don’t have to pay for issues such as repairs and maintenance. So, rather than decide based on what the headlines are saying about homeownership being the best route, consider your current situation.
Some other advantages are:
- If something major breaks it’s usually the homeowner’s responsibility to get it fixed
- You don’t have to pay yearly taxes on the home.
- Lesser down payment required
- You can either renew or end the least and move on to something or some place different.
Pros of Buying a House
- When you pay off your mortgage, the home belongs to you.
- If your home has appreciated more than the taxes, mortgage, and interest you’ve paid in–you will earn a return or break even.
- Keep in mind that owning a home also qualifies you for tax credits that can offset some costs.
- You can change the home or property as you please. Although if living in a HOA community, you will first need to find out if this is permissible.
- You will no longer be sharing your walls with your neighbors!
Rent or Buy…What to do?
Figure it out by researching the pros and cons of homeownership, crunching numbers and taking a long, hard look at your finances and lifestyle.
With deciding to rent or buy, you want to do what is best for you.
You may move from place to place in your career and don’t need the hassle of putting your house on the market every year.
Consider the cost of housing in your area.
Houses may be too expensive for you, so it could be better to rent.
But renting may also be expensive and owning a home might be the better option.
Can you get more of a return on a home investment or by investing your money in the stock market or other methods of investing?
We must consider these caveats before you should make a final decision on whether to rent or buy.
Your situation isn’t like others and you need to think about where you want to live, what type of house and environment you’re looking for and how it will all pan out.
Know that sometimes it’s best to rent rather than buy–What it all boils down to is being truthful with yourself on whether you are mentally and financially ready to buy a home.