One of the biggest questions to face young people and couples is whether to rent or buy a home. In fact, in these turbulent times more and more people of every age are considering this question, as they face unsure and unstable real estate markets and uncertain jobs.
While renting can seem like the affordable choice, especially when you are working with little extra money, there are other considerations, especially when you think about the long-term use of your hard-earned money.
Some things to consider when deciding whether to rent or buy a home include:
- Renting will often be more affordable on a monthly basis. You will not be paying property taxes and often you can find options which include extras such as electricity and property maintenance. For one monthly fee you can have all or most of your living expenses taken care of, and this makes budgeting fairly easy as well.
- Renting can be a good option for those willing to save a little extra money every month towards the future plan of purchasing a home. If you’re able to realizethose savings ie. actually save the extra for some larger purpose, then renting may be a good choice in the interim, until you can accomplish your longer term goals.
- Buying a home used to be every young person’s dream, but it also used to require a very large down payment. The fact that you can now buy a home through various programs with far less down is a mixed blessing, as evidenced by the many people who are desperately maxed out on their home loans, or indeed facing foreclosure or bankruptcy. For those considering buying a home, you may want to ask yourself some honest questions, such as how stable is my job and do I have the means to pay a mortgage even if I lose that job? Do I want the responsibility of mortgage payments and home maintenance? Is my credit rating good and can I qualify for the type of home I’d like to own?
- Your credit rating, the type of home you can afford and the projected resale values in the area/s you can afford will all be considerations as you ponder this issue. A home purchase is a large – perhaps the largest – investment and must be considered from all possible angles. If you buy a home and decide to change cities for professional or personal reasons, for instance, what will happen if you cannot sell your home? If you are using all available capital for your mortgage payments, how will you afford to live in your new location?
- Living arrangements – and indeed families themselves – are far more diverse and flexible than they have been in the past. You may own a home or several over your lifetime, or you may not. Let the decision to rent or to buy be worthy of deep consideration and intelligent financial planning.