Unless you are the heir to a vast fortune and never have to worry about money, (and most of us aren’t!) you have to live somewhere and paying a monthly rental fee or mortgage is a part of life. The decision to rent a home or take the plunge into the market and buy your own home comes down to a personal decision and a common sense approach to a long-term investment.
Since a mortgage comes with interest payments that, over time, will amount to equal or more than you paid for a house, renting can also have an advantage in long-term savings and investment. Before you buy a house, consider a few basic rules that will factor into your decision to drop a bundle on that new place and whether owning or renting is better for your situation.
How often do you expect to move in the future?
If you have the type of job or lifestyle that will have you moving every couple of years, you are probably better off renting. Every time you buy or sell a home you will incur significant costs. Unless the value of the home you purchased goes up by at least ten per cent, you’ll be losing money.
How stable is your employment situation?
If you have trouble holding down a job, you probably shouldn’t be considering buying a home. Regular payments including mortgage, property taxes, utilities, insurance and maintenance won’t go away.
How much can you afford?
Prepare a monthly budget and figure out how much you will make in a year, and how much it will cost you to run and pay for a house. The numbers will give you the quick answer.
Are you able to save money every month?
Even if you can afford a down payment, once you move in will you be able to put some money aside every month for savings and emergencies? Being house-poor will have a negative affect on your quality of life.
Your personal situation
Not everyone has a large family or the inclination to do yard work. Buying a house comes with some obligations that can be avoided be renting an apartment or condo. Your lifestyle will play an important role in your decision.
Whether to buy a house or to rent one is a very personal decision based on a number of variables. Therefore, it is worth taking the time to think about which option suits your circumstances best.