Typically, buying a house is viewed as a smart decision overall. However, such a big life move is uniquely personal to your specific circumstances and should be fully evaluated before making a decision.
So, how do you decide what’s best for you? Here are five questions to help you determine if you should buy or rent a home.
#1: How financially stable am I? If you struggle to save anything from your paycheck and live under a great deal of credit card debt, taking on a new, monthly financial commitment of a mortgage may not be best bet for you. On the other hand, if you have a tidy nest egg and low debt, home ownership could be the best move.
#2: How mobile do I need to be? Renting is a good option for those who move frequently or may need to move in the near future. Buying a home is a smart move if you plan on living in your current city for a few, or many, years.
#3: Is my job secure? While no job is 100% safe, knowing you are managing your duties well and the company is thriving provide points in favor of home buying. Building equity in a place of your own can help increase your net worth and give you greater security. If your job is in jeopardy or the company's struggling, it may be best to delay buying and rent until those issues resolve.
#4: Is home ownership realistic? Ask yourself if in addition to the down payment and mortgage, you can also cover closing costs, taxes, insurances, and unexpected repair expenses that inevitably arise with a house. If so, you should look further into purchasing a home. If not, renting a place that handles those costs as part of the contract is probably your best move.
#5: Do you feel ready for the commitment? Owning a home offers many benefits, from a stable monthly payment, to tax benefits, to the freedom to decorate the home and yard as you like. However, on the flip side, it's a responsibility that brings a requirement to repair it, and sell it instead of simply moving out of an apartment. Do a gut check along with putting pen to paper to help decide whether you’re more ready to buy or rent.
Thoughtfully consider your decision before you jump into buying a home just because your parents advise it or you think it's time. In addition, don't resort to renting if you can afford to purchase and maintain a place that offers tax advantages and builds equity. These five questions can help lead you to the right decision of whether to buy or rent. For more information about becoming a first time homebuyer and what the process entails, download our eBook now!