Rent vs Buy Dilemma

Deciding whether to buy or to rent a home is a dilemma most people face at some point in their lives. It’s common to feel overwhelmed when trying to determine which option is best. Is it smarter to buy a house or to rent one? There may not be a universal answer to this question. The decision to buy or rent is a personal choice that is dependent on many factors unique to each individual. It’s important to take time to ask yourself some key questions to help guide you in your decision.
1. Where do you see yourself in the near future?
This question is a good place to start. Do you have a steady job that you plan on keeping for the next several years? Or have you just completed your degree and you’re unsure of where you will be working? If you don’t have employment security, you may want to consider renting. On the other hand, if you are secure in your job and have more stability, buying may be the best option for you. Another important element to think about is how often you plan on moving in the next five years. Are you planning to travel a lot? Or do you envision yourself staying in the same house and building a life in one particular city? Before investing in a house, it’s wise to anticipate what your life will look like in the near future.
2. How much do you have saved for upfront costs?
The most obvious upfront cost when buying a home is the down payment you will have to pay upon purchasing the house. Although you may only be required to pay five percent for houses under $500,000, most financial experts recommend putting a 15 to 20 percent down payment on a house. Do you have enough money saved for this type of expense? Along with the down payment comes other upfront costs such as an appraisal or home inspection. A home inspection is also strongly recommended before purchasing a home and costs about the same as an appraisal (usually $300 to $500). These expenses require you to take a careful look at your finances and decide if you have enough savings to purchase your own home.
3. Are you financially prepared for recurring and hidden costs?
Once your upfront expenses have been paid, there will be recurring bills to pay and some surprise expenses along the way if you own your house. Your recurring bills will include property taxes,homeowner’s insurance, and utilities. Will you be making enough money every month to cover these costs? Beyond your monthly bills, there will inevitably be some hidden costs you may not have planned for. For example, if your furnace breaks down, you will have to replace it. You may also have to get your roof fixed. You will be responsible for these unforeseen costs as well as regular maintenance on your home such as exterior painting, major appliance replacement, and general upkeep. If you have a steady income and are able to afford these expenses, you may decide that you want to buy your house. However, if these payments sound too hefty to you, you may want to leave them for a landlord to pay.
4. Is owning a house important to you?
Although there are more costs to think about when buying a home, there is a sense of pride that many people get from owning their own home. Are you one of those people? Is the ability to say that you bought a home something that matters to you? There is also a feeling of stability that comes with your purchase. You don’t have to worry about a possible eviction or a landlord who decides to move into the house or apartment you are renting from him or her. However, if you’re more of a wanderer in nature and stability isn’t a priority for you, renting may suit you better. Another thing to consider is the freedom to decorate as you see fit. If you own your home, you can change anything you want at any time. You can redecorate or renovate any room without asking anybody’s permission.
The decision to buy or rent is very much subjective to your values and what you plan to do in your life. What may appeal to one person will not necessarily appeal to another, so it’s essential to look at your personal situation when making your choice. Thinking carefully about the questions listed above will allow you to navigate your way through the rent vs. buy dilemma and help lead you to the decision that’s right for you.

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