Buying or Renting a Home: Which is best for you?

Should you buy or rent? It’s a big decision and there are pros and cons to each option. Buying a home is one of the biggest financial purchases you will ever make in your life and it is only natural to carefully consider your situation before deciding whether to rent or buy a home.

To answer the question, whether buying or renting a home is better for you, you have to look at your situation. Take a look at the infographic below:

 

Here are some questions to ask yourself when considering renting vs. buying:

• What can you afford?
• How long do you plan to stay in the home?
• What are your career and family goals?
• Can you afford to be responsible for all the costs of homeownership?

Renting vs. Buying: Pros and Cons

Renting vs. buying a home isn’t just a matter of ownership, it’s also about your comfort and your vision for your life. Take a look at the pros and cons of the two options so it can help you decide whether buying or renting a home makes more sense in your unique situation.

Pros

BUYING	RENTING
Pride of ownership Your monthly payments build equity and lead toward homeownership Your monthly payments will remain the same for the span of your loan with a fixed-rate mortgage You can make a profit when you sell your home if its value increases Tax deduction Helps build good credit You can pass the home to your family members You can make any desired home improvements	Unlike buying, leasing is a short term commitment You don’t pay for repairs Rent payments may be lower than mortgage payments You don’t have to pay for closing cost or big amount of down payment to start renting There’s no investment risk if the housing market change

Cons

BUYING	RENTING
Coming up with the down-payment and other home-buying fees Risk of having to sell at the wrong time if you need to suddenly move Responsible for maintaining the property Making a long-term commitment to a location	There is no tax break for renting Unlike buying with a fixed-rate mortgage, your rent will most likely increase from year to year No building of equity You cannot do any cosmetic or alteration done to the home Landlords may not respond  readily to your concerns Can get kicked out with little notice

Are You Ready To Buy?

Seeing how much can you afford for a home is a good first step in balancing your decision whether to rent or buy a home. You also need to consider your situation. How long do you expect to live in this house? If you are buying a home, be prepared to live there for five years or more in order to recoup the cost of buying and to build your equity. If you are not ready for long term commitment, you’re probably not ready for the responsibility of homeownership.

Do you also have the financial capacity to buy a home? If you are thinking of buying a home, the first step is to consult with a lender to determine if you can qualify for a mortgage.  They will need to check your credit history, your income, debt-to-income ratio, and your assets. You have to meet the lender’s requirements in order to get approved for a loan.

Buying a home is an “American dream,” but it is also a big responsibility that shouldn’t be taken lightly. You should carefully decide your best option and take all the time to consider the pros and cons of renting and buying. But looking at the current state when rents go up and mortgage rates are still low making it more affordable for people to buy a home, as long as you are financially ready and emotionally prepared, buying a home can be a smart move.