For most people, buying a home is one of the biggest decisions they will ever make, which is why it should not be taken lightly. In fact, there are several factors you should consider before you make such a decision.
In this guide, we will look at some of them. By examining these factors and figuring out how they apply to you, you can determine whether to buy a home or rent one.
Let’s get started!
Can you afford it?
This is probably the most important factor to consider when you are thinking of buying a home. On average, buying a home is more expensive than renting one. In most cases, you will have to pay the following:
- A down payment between 5% and 20%
- Monthly mortgage payments
- Maintenance costs – imagine you have to replace an appliance or fix a leaking roof?
- Property taxes
- Closing costs
- Pest control
- Homeowners insurance
- Flood and earthquake insurance
By the way, financial experts advise that monthly mortgage payments are less than or equal to 28% of your gross monthly earnings. Furthermore, your monthly debt payments should not exceed 36% of your income. The reason for this is simple: keeping your debts within these percentages will give you leeway and ensure you can meet your obligations.
To decide whether to rent or buy, determine if you earn enough to take on the financial responsibilities it represents.
Do you have a family?
When deciding whether to buy or rent a home, another important factor you should consider is your family. If you stay alone, you have less need for a home of your own than if you have a family, especially if it is a large one. For many people, having more space to accommodate their family is a major motivation to buy a home.
Do you want more freedom?
If you are tired of having restrictions on what you can and cannot do, perhaps it is time to buy a home. If you have one, you can do virtually anything you want without fearing criticism from a neighbor or your landlord. For example, you can redecorate your house, replace appliances, and organize repairs in line with your desires.
Will you be moving places anytime soon?
If you are a nomad, we advise you to steer clear of buying a home. The reason is simple: renting a house allows you to change homes at will without any hassle.
When you buy a home, the reverse is the case. For instance, if you have to change locations as a homeowner, you might have to sell your house. And this will involve a process that will include:
- Locating a real estate agent
- Listing your house
- Examining different offers
- Engaging in negotiations
- And paying fees to close your house’s sale
However, this process can take months, as opposed to the easy option of simply packing your luggage and leaving if you rented a house instead.