Is it better to rent or buy a house? That’s a question virtually all adults ask themselves at one point or another. There are pros and cons to renting, just as there are pros and cons to owning a home. The decision to purchase, as opposed to renting, is complex and based on numerous factors. According to the National Association of REALTORS®, nearly 80% of Americans surveyed, believe buying a home is a good financial decision.
For most people, deciding to buy a home is the largest financial decision of their lifetime. Before making the jump into homeownership, there are some things you should ask yourself first. The professionals at The Move In Group have provided the following financial and lifestyle thoughts to consider when determining if buying a home is the right decision for you and your family.
What’s your lifestyle?
See our Lifestyles section on the home page to suggest suitable neighborhoods .Are you a professional executive with a busy work schedule or a beach bum? Do you love going out or do you prefer to entertain? Are you family oriented, with children of school age?
Are you a DIY person?
How do you feel about home maintenance—will you be eager do-it-yourselfers or will you hire help? Knowing what you are willing to do to maintain the home is an important part of the decision process. Owning a home means tending the yard and keeping up with repairs. Making the transition from being a renter whose first call is to the landlord, to a homeowner who needs to troubleshoot the problem themselves, can be both exciting and daunting.
Do you have a steady income?
The first question is whether or not you can afford to purchase a home. With good credit, stable income, and documented employment, it could prove to be a good financial decision. However, without them, it may be difficult to qualify for a home loan. Often, it is just a matter of timing. Sometimes the smarter financial choice is to rent, while working to improve your credit score and saving for a down payment. Don’t hesitate to contact a mortgage professional to understand what you can afford, even before you decide on buying a home.
Do you plan to own the home for an extended time?
With good planning, a home purchase is one of the best investments you can make. With that in mind, it’s essential to understand that investing in a home is not like investing in a stock portfolio. Homes usually appreciate in value over time, while the homeowner builds their equity through monthly mortgage payments and potential capital growth. If you plan on staying in the house for less than two years, it is unlikely that you will see a substantial financial return on your investment.
Understand the market in the area where you want to live.
Despite the advantages, buying a home is a major financial decision that shouldn’t be taken lightly. If you are buying in a market where real estate prices run in cycles, the timing of your purchase will be very important. If you buy in a rising market, the value of your home could drop when that bubble bursts. Also, when there is low inventory and the prices are rising, it can be tempting to pay more for a home because it seems like the market will soon escalate out of your reach. When you are considering buying, take a look at not just where prices are now but where they have been over the past 5, 10, and even 20 years.
How do the options compare?
When it comes to renting, calculating expenses is as simple as finding out the monthly rent and average utilities. However, when it comes to purchasing a home, the calculation becomes more complicated. Our agents at The Move In Group can help you with every aspect of the home purchasing process and will help you answer all your questions.
The National Association of REALTORS® has a Buy vs. Rent Comparison to help you understand the cost comparison. http://www.realtor.org/field-guides/field-guide-to-buying-vs-renting