Knowing when it’s the right time to buy a house can be confusing. There are positives and negatives to buying a home, just as there are to renting. Ultimately, deciding if and when you are ready to buy a home is a personal decision. Whether to buy or rent is up to you, but hopefully the following information can help you make the best decision for your situation.
Benefits of Buying
• Build Equity
As you pay your mortgage and property values increase, you’ll see a greater return on your investment, helping to increase the equity built in your home and being able to use that as a financial tool in the future.
• Personalizing Your Home
When you buy a home as opposed to renting, you can modify it to the styles you want and what works best for you. Additionally, as you make improvements to your home, it can help increase its value over time.
Drawbacks of Buying
• Financial Commitment
Buying a home requires a large amount of cash and a solid financial history, which can sometimes make it a bit tough for some to jump into home ownership. In addition to good credit and a down payment, you are responsible for the maintenance of your home making an emergency fund necessary to cover any unexpected repairs. Planning ahead of time to buy a home can help you overcome this hurdle.
• Location Commitment
It can normally take at least a few years of owning your home to see values go up enough to make a profit from selling. This makes it difficult to sell your home if you want or need to relocate.
Benefits of Renting
• Location Mobility
If you are planning to find a new job or if your location future is unstable, having the ability to move is important. Renting allows you to move more freely between locations.
• Financial Freedom
Your financial commitment is relatively small because your landlord covers the cost of unexpected repairs and maintenance, as well as property taxes and other home ownership expenses that may arise.
Drawbacks of Renting
• Not Building Equity
When you pay rent, all of your money goes to the landlord and you don’t see any financial return. Paying into a mortgage instead of into rent helps you build equity that gives you financial power and equity that you may be able to access if needed in the future.
Usually when you rent, you are not allowed to modify the space in any way. In most renting situations, you must keep the structure and design of the place intact.
Choosing whether to buy or rent is a highly personal decision and all factors should be considering before making a final decision. Weigh the pros and cons of both to make the right decision for you! If you are thinking about buying a home, download our First Time Home Buyer eBook to learn more and prepare yourself for the home buying process!