Weighing options: How to decide whether to rent or buy

MattHerndon
Husband. Dad. Career and leadership development savvy by day, huge DIY fan by night.
MattHerndon
MattHerndon
You can get your own content published on this site as long as you have CommentLuv installed on your site.

Doing so means you get exposure to thousands and thousands of other CommentLuv users and your posts get sent out to the massive subscriber list.

Google loves this site and indexes it multiple times per day and posts always get lots of comments so you can be sure of some excellent exposure.

See the Write For Us page for more details

btw.. you can get this author box here

House for sale
As the housing market continues to recover, interest rates are projected to remain at their current historic lows at least until the end of 2014. Those low rates and the wide availability of vacant homes definitely favor buyers. But homeownership isn’t right for everyone. In fact, some former homeowners whose properties were foreclosed have vowed to never buy a home again.

If you’re trying to determine whether renting or buying is best for you, consider the following questions:

Where do you want to be?

Thinking about packing up your things and trying life in a different locale? Don’t even think about buying a house. The high cost of buying a home mean that if you sell your home within the first couple of years, you’re likely to end up losing money. It could take several years in your home before the purchase pays off, and some first-time homebuyer programs require that you stay in a home for a set period of time in order to receive certain benefits.

If you’re going to buy a home, you need to be reasonably confident that you are going to stay in one place for at least two years – the longer, the better. It’s impossible to know what the future holds, but if there’s a chance you will move in the near future, it might be wise to wait and see how things play out.

Can you cover the costs?

While most renters pay a deposit on their residence – and in some cases also pay first and last month’s

rent up-front – buying a home requires a considerable up-front investment. You should be prepared to make a down payment, the amount of which can vary considerably depending on the home’s value, the market in which you’re buying and many other factors. Use a mortgage payment calculator to find out how the amount of your down payment will affect your monthly mortgage payments. Anticipate spending a few thousand dollars on the down payment, and be pleasantly surprised if it’s less.

You’ll also need to cover miscellaneous fees for title searches and closing costs, and while these costs – along with your Realtor’s cut – may be included in your overall mortgage, you’re still paying for them, even if that money doesn’t come directly out of your bank account

Homebuyers need to have extra funds on-hand — generally at least $1,000 – to cover inevitable repairs and maintenance that the home will need upon purchase.

Do you have a good credit score?

If you have already gone through the pre-approval process with a mortgage company, you’re probably aware of your credit standing. A low credit score can limit the home value you are approved for, disqualify you for some federal loan programs and lead to higher interest rate on your loan. Even a marginal difference in your interest rate can cost thousands of dollars over the life of the mortgage. In such circumstances, you may be better off by waiting to buy a home until you can rebuild your creditworthiness.

As a general rule, if you’re not sure you can afford a home, don’t rush into it. Home prices won’t be skyrocketing anytime soon, so a cautious approach is best. 

Comments

  1. hmm nice idea… i will keep it in mind when i reach upto that level.
    Nikitajain recently posted..Best of Shayari | 30 Type of Shayari CollectionMy Profile

  2. Given that we can still write off interest, I’d say there is definitely value in owning versus renting. In fact, for this reason alone, some choose to not pay off their home mortgage. Not sure I would go that far, but in the end, it’s nice to be working towards building an asset, which you can’t get from renting.

    I agree there are certain times when it might not make the best financial sense, and in particular, when the time you will be in a certain location is for sure going to be short.

  3. Renting versus Buying is certainly a tough decision. I t does at the end of the day come down to budgeting. If your budget can allow you to buy a home and you have the credit to be able obtain a mortgage, then you can choose. There are many pitfalls of jumping into buying a house without the proper planning and budgeting.

  4. If you are thinking about buying a home in California please try to avoid buying homes that have those dreaded Mello-Roos tax.

  5. Samantha Bennet says:

    I advise buying versus renting. The equity you can make long term by owning far outweighs paying for a house that you will never see the profits on. Foreclosed homes are a great place to start as the equity can grow much quicker than a non foreclosed home.

Speak Your Mind

*

CommentLuv badge