The decision whether to buy or rent a home is one of the toughest decisions one will make in their life. And despite what many real estate professionals will tell you, there are actually pros and cons to both buying and renting.
The truth is, the right answer varies from person to person, and it isn’t always so obvious.
5 questions you should ask yourself when trying to decide between buying or renting:
- How much can I afford?
- How long do I wish to stay in the house?
- Is stability or flexibility more preferable?
- Will I be able to maintain my home?
- What are my long-term goals?
Determining the cost of buying and renting
If you’re renting chances are you’ll have to put down a security deposit to be used should damage on the property occur. Additionally, renters typically pay first and last month’s rent upfront. Depending on the property, you may also be required to pay for utilities, such as water, electric, and cable.
Purchasing a home usually means taking out a mortgage, or a home loan. In order to help finance the cost of the property, you’ll need to find a lender or a bank to lend you enough money. This money will then be paid back with interest through monthly payments. The duration of mortgages is typically 15, or 30 years.
Almost all mortgage programs require a down payment. Although not always required, a down payment of 20% is usually recommended to avoid the purchase of mortgage insurance.
Buying a home comes with many other additional costs as well. Appraisals, inspections, mortgage application and origination fees, general closing costs — it can add up very quickly.
Key Differences
Purchasing a home can accumulate equity. As the equity in a home grows over time, the homeowner will have opportunities to capitalize on it. As the homes’ value goes up, the more money you’ll get when you sell. Your chances of this happening are even greater if you have a fixed rate mortgage. Ideally, you’d purchase a home when rates are low, and sell when rates are high. This will give you the maximum return on your investments.
If flexibility is what you’re looking for, then renting is probably the right option for you. Perhaps you’re moving to a new city, or trying out a new career, renting can give you the option of trying out something new before totally committing to it with a home purchase.
What are Your Life Goals?
If you’re ready to settle down and start a family, then purchasing a home could be the right choice for your family. If you’re unsure about your future and don’t quite know where you see yourself, then you may want to consider renting until you have a plan.
Nobody Knows Your Situation Better Than You
Although it’s important that you make the decision for yourself, there’s nothing wrong with consulting a real estate professional to help steer you in the right direction.
Quick Comparison
Source: https://www.bankrate.com/real-estate/renting-vs-buying-a-home/
