Deciding whether to rent or buy a home is a big decision that depends on a variety of factors. There’s no one right or wrong answer; whether you should rent or buy depends on your own situation and how both the rental and house markets are currently doing.
The first question to ask yourself is are you looking for short-term or long-term lodging in your area? If you are moving within the next five years, then it’s recommended that you wait to buy a home. Otherwise — say you are planning on staying in the area — buying a home may be appealing, because homeownership offers privacy and freedom that renting will not allow.
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Next, you need to consider if you can afford to buy a home. If you cannot, keep saving money and renting for the time being. You can continue to look at houses when you are ready. To get a feel for the market, calculate how much renting a home would cost in your area and compare it to how much buying a home would cost in the same area.
To buy, you’ll need to have a down payment ready. These range anywhere between five to twenty percent of the cost of the home, but twenty percent is most often required. However, there are programs out there designed to assist first-time homeowners with this expense. Additionally, it’s a good idea to wait to buy a home until you have saved up an emergency fund for unexpected costs and for security.
Other questions to ask yourself about finances include what is your credit score, and what is your debt to income ratio? The better your credit and the better your debt to income ratio, the more likely you are to get a mortgage at a low interest rate.
While weighing the pros and cons of buying or renting a home, research the state of the current housing market. It’s always better to buy a home when the market is cheaper and the demand is lower. More demand raises the price point of houses as potential buyers bid on the same homes. You can gain a sense of where the market is at by viewing home listings in the area you wish to buy in.
In addition to the down payment, there are other costs that come with being a homeowner. Unlike a renter, a homeowner needs to set aside money for the cost of maintaining the home. Upkeeping a property, especially one on the larger side, adds up. For example, homeowners are responsible for cleaning, landscaping, appliance maintenance, and plumbing.
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We understand that sometimes buying a home isn’t about the price tag, but it’s about having a personal space where you make memories. For many homeowners, it means having enough space to raise a family. You feel secure and uninterrupted in your own home where a landlord will never show up unexpectedly to fix your dryer or ask for your rent.
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Good luck, and we wish you the best of luck while out doing your house hunting adventures!