A Few Things to Remember When Renting or Buying a Home

Are you trying to decide whether you should continue renting or if it’s finally time to take the plunge into home ownership? This can be a daunting decision to make, taking up weeks, months, even years to come to a final conclusion. For some, it’s absolutely the right choice. For others, not so much. Not that there is anything innately wrong with renting. Renting can be extremely beneficial, even if you were financially secure enough that you could easily afford to buy a home. It all depends on so many factors, so don’t let any cliches or adamant friends persuade you one way or the other without you doing your research first. There are wonderful financial benefits that can come from owning a home, but those financial benefits will only manifest themselves if you buy a home under the right circumstances and for the right reasons. Here are three things that you should always consider when you are trying to decide between renting or buying a home:

Personal finances

This is arguably the most important thing to be absolutely sure of before taking the leap from renting to owning. Do you have any savings? What kind of down payment would you be able to make (if any) if you were to purchase a home? Are you financially secure enough to comfortably anticipate all the other expenses that come along with home ownership such as property taxes, maintenance costs, etc? What’s your credit score like? If your credit score is on the low side, it’s probably not the right time yet to think about buying a home. A high credit score will get you a better interest rate on your mortgage, so perhaps considering home ownership should be on your to-do list if your credit score is high.

Location

Do you have aspirations of owning a home in, say, Seattle? How about New York? Well, hopefully, you’ve been saving money for years because those are two of the most expensive cities in America to buy a home in. But other areas, even ones that may be near by wherever it is that you’re looking just may be a significant amount cheaper. This is often the case due to a variety of factors, but if you happen to be looking at an area that is known to be pricey, make sure you consider nearby cities because price differences could be a major. Location is also important to consider because you don’t want to fall into the trap of making an emotional buying decision with $100,000+ on the line. Location often is “non-negotiable” to many potential home owners. Be negotiable. It very well could save you a lot of money and increase your square footage. But by all means, if you can afford your “dream” home in your “dream” area comfortably, do it.

Lifestyle

Make sure that if you do leave the renting world and buy a home that you do it for the right reasons; reasons that coincide with whatever life plans you have for yourself. Is your plan to only live in your first home for a few years and then move again? This option gets more credence than it should. It often is not a great investment, unless your plan is to rent it out after you move. If you’re planning on having kids - or have kids already - you may want to consider a more permanent home owning situation. And always ask yourself: do you really need that much space for two people? It’s always a financially responsible decision to match your lifestyle with your home purchase...or rental for that matter.