There are a lot of different factors to consider when deciding whether to buy or rent a home. Investing in a house is one of the biggest financial decisions that you will make in your lifetime. Here are some of the most important factors to consider before taking a big step.
Credit History: Having a good credit score is a huge factor when you want to buy a house. A low credit score could create obstacles in obtaining a mortgage and interest rate. A higher score may help you obtain a more favorable interest rate and mortgage product, which can help you financially in the long run.
Obtain a copy of your credit report when you are deciding whether to buy or rent a home. If there are any errors on your report, take steps to get the errors corrected. If your credit score is too low, work on paying off any debts in collections to raise your credit score.
Financial Responsibility: Lenders want to know that you are financially responsible before offering you a home loan. Banks look at your job history to ensure that you have a stable income over a long period of time. You will also need to build up a large enough financial nest egg to cover the down payment, insurance, closing costs and other expenses on a first-time home purchase. Owning a home also means that you are responsible for all repairs upon buying the home and down the line. If you’re not ready for this type of financial commitment, renting may be best. However, taking on this financial responsibility does mean that you’ll be building valuable equity into your own home.
Lifestyle and Mobility: Your lifestyle can also be a factor in whether you should buy or rent a home. If you work in an industry that requires you to move around a lot, renting might be a better option for you. If your job is relatively stable and you decide you want to "put down roots" in the city where you currently live, you should explore buying.
If you’re thinking about buying a home, download a copy of our eBook which will walk you through some the steps of becoming a first-time homebuyer!