Many people in today’s economy face the
question of whether they should rent or buy their home. The housing market is
still considered by many to be a buyer’s market, which is great if you
want to purchase your home. However, you need to think long-term when
considering whether buying or renting makes more sense. That buyer’s market
that would work in your favor today would work against you if you needed to
sell your home in a year.
When determining whether to rent or buy,
consider the following factors:
Planting
roots
One of the most important questions you need
to ask yourself is: “Do I plan on staying here for a long time?" If you
are going to move in the next five to seven years, then you should probably
just rent your home because you most likely won’t be able to pay off your
mortgage or have monthly payments low enough to make buying a home worth it.
Not to mention, the quick turnaround means that you have to sell your home in
what may still be a buyer’s market.
Long-term
savings
For some, purchasing a house just makes more
sense financially. If you are committed to living in one spot for a while and
building equity in your home, you’re actually making a sound investment in
buying a home. Renters don’t enjoy that advantage. Use
financial tools that can help you estimate how much each option would cost
you and what would the financial benefits be of one option over the other.
Consider
your debt
As you try and make the financially
responsible decision of buying or renting your home, you need to consider all
of your debt. Do you have a lot of credit card debt? Are you still paying off
student loans? Maybe you just recently purchased a brand new car. All of these
affect the types of loans you can get from lenders when purchasing a home. If
you have a lot of debt, then your interest rate for your mortgage is probably
going to be high, which can cause you to pay much more for your home in the
long run. However, when you rent a home, your debt has little to no effect on
your monthly rent payments. You just have to decide if saving a little money
while renting make the most sense.
When you purchase a home there are several
steps that need to be completed before you can actually move in. However, when
renting your home, you simply need to fill out an application and wait for
approval. If the process of buying a home is enough to sway you away, then
renting is probably your best option. However, if you have done the research
and are willing to go through the processes, then by all means go for it!
Deciding whether to rent or buy can be
difficult. There are certainly pros and cons of both choices, but ultimately
it’s up to you decide which is choice is best. Just remember to consider all of
your financial obligations and whether your choice is a sound investment before
becoming a homeowner.
Matt
Herndon loves spending as much time as possible with his wife and three
kids. When he’s not rushing from football games to riding lessons and
volleyball games, he’s busy checking things off his honey-do list.
