Weighing the options between buying or renting everyone should think how it will affect your financial health, lifestyle and personal goals.
If you find yourself in this scenario, there are several key questions to consider that can help guide your decision.
How do home & rent prices compare?
If you’re facing sky-high rent prices that climb each year, a mortgage might be making a lot more sense. On the other hand, if you want to live in an expensive area, you could be priced out of buying a home (especially without extensive savings).
How long do you plan to live here?
The longer you live in a home, the more likely it is that the financial investment of buying a property will pay off. As a general rule, it takes five to seven years for the financial benefits of homeownership to kick in.
Is it a good time to buy, in terms of your finances?
For first-time home buyers, it is recommended at least a 5–10% down payment. Buyers with 20% down payment won’t have to pay private mortgage insurance (PMI)—which could save significant amounts per month. Healthy credit is also a big consideration before even start pre approval and loan generating process.
Are you comfortable with other costs of owning a home?
There are maintenance costs, homeowner’s insurance, and property taxes. There might be homeowners’ association fees as well. On top of that, there is always a chance for unpredictable costs, like a leaky roof that needs to be replaced or broken furnace/AC or any other out of the blue surprises. You might be ending up budgeting at least 2% of your home's value each year for repairs.
Are you attracted to flexibility or stability?
Owning a home always limits the amount of flexibility you have in your lifestyle. With rental agreements you can usually plan month to month, 3, 6 or 12-month term that allows you to renew (or not) at the end of your lease. If you are still unsure of where you want to settle down and live over the long term rent might be a better option. Conversely, owning a house can offer more stability. Living in the same location for years can allow you to get to know your neighbors and feel like a part of the community.
There is no definitive answer as to whether renting or owning a home is better. Ultimately, deciding between renting and buying a home is a personal choice. If you haven’t determined which is best, it may be helpful to speak with a real estate agent who can help you weigh your options and make an informed decision.