There will come a point in a person’s life when the question on whether to buy a new home or continue renting one becomes relevant. With the change in the financial picture and stricter lending rules, many of us are left confused and unsure of our next move. Some see today’s low mortgage rates and reduced home prices as the perfect time to become a homeowner, while others argue to wait it out for several more months and continue renting instead. Rather than focusing on the happenings in the real estate world, it is more beneficial for you to look into your own personal finances when deciding whether it is time to move out or continue renting, find a new property to rent or buy.
To rent or buy? That is the question!
Opting to Rent
1) Length of Stay
A major reason to continue renting is when you only expect to stay in your location for a couple of years. Though this is purely a personal decision, factors such as possible job relocation or marriage in the near future can help you decide to stick to renting, as this gives you the most flexibility in the near term.
2) Real Estate Prices
Given today’s volatile economy, it is natural that we see fluctuations in real estate prices from time to time. You can gauge how these changes would affect your payments by utilizing a free mortgage rate calculator and continue with your rental payments until the home purchase prices and interest rates match your needs. If you are in a market with several foreclosures and lowering prices, then waiting it out can help you get the best eventual price.
3) Personal Income
Another item you need to factor in is your income. If you are in a stable position with a good pay, then opting to buy a home seems a more suitable choice, but when you are still new to a job or paying back school loans, just worry about making good with your rent as you reduce debt and improve your job stability. There are many additional rent vs buy advice articles out there, but these are a good start for the positives on renting.
Opting to Buy
1) Build Equity
There are many factors that can influence your decision to buy a home. One of which is that becoming a home owner can lead to a substantial increase in your over the years equity. The more you make good on your mortgage payments, the higher your equity becomes, so the mortgage can act like a savings account that you cannot tap into until much later. Instead it just builds slowly and consistently.
2) Regular Monthly Payments
Many real estate gurus argue that purchasing a home is much more stable as rental fees fluctuate from lease to lease unlike a mortgage which allows for fixed monthly payment schemes. This allows you to better plan your budget over a several year period.
3) Home Ownership
Perhaps the biggest pull for home buyers is that in 20 to 30 years time, you can rightfully say that you are a home owner. Even with your struggles to make the monthly mortgages, you can always look to the future and know that your money is going towards something of value that you can actually touch and use every day.