Buy or Rent?

townhouses-detachedHow do you know if owning a home makes the best financial and personal sense for you and your family? Is it the right time for you to buy a home? Determining whether you want to own or rent a home depends on your personal preferences and your financial situation. Begin by asking yourself these questions:

  • Do I/we have a steady, reliable income? If you are thinking of changing jobs or if your job is iffy, now is not the time to buy a home.
  • How much total debt do I/we have (credit cards, car loans, students loans, etc.)? Is it manageable? If you are thinking of buying a car, if you can, put it off until you have bought your home.
  • Can I/we afford to pay a mortgage and other expenses, such as insurance and property taxes in addition to our current monthly expenses? Note that there may be other monthly expenses such as water/sewer, garbage collection, gas/electric, and pest control that you might not pay currently.
  • Do I/we have money saved for a down payment?
  • Do I/we have money saved for closing costs?
  • Do I/we plan to stay in the home for several years?
  • Do I/we want the responsibilities (and lifestyle changes) that go with being a homeowner?

If you answered yes to these questions, then the time is probably right for homeownership.

Pros of ownership:

  • You don't have the prohibitions of a landlord. For example, you can put nails in the wall to hang pictures or have a pet.
  • Your home is not just shelter, it's an investment. As property values go up, your equity in the home increases.
  • The interest you pay on the mortgage and your real estate/property can be deducted from your federal income tax.

Cons of ownership:

  • It may cost more to own than rent the same size dwelling.
  • Property values can go down as well as up.
  • You have to maintain the home and pay any maintenance and repair costs.
  • Moving to another home can be dependent on selling the current home.

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