How to Know What’s
Best for You ?
There are many reasons why you may have decided to purchase a home – a growing family that needs more space, you’re tired of paying rent and want to invest your money and you’d like to get the tax breaks that homeowner’s enjoy. Those are just a few.
Don’t simply compare what you’re paying in rent to what you’d be paying with a low interest mortgage payment. Even though it can be an asset for the future, you may not be ready financially to make the commitment.
The pros in homeownership highly recommend that you have a down payment of at least 10 to 20 percent and have an emergency fund socked away that can get you through 3 to 6 months of bill payments.
There are also other points to consider when deciding whether to rent or buy. Buying a home is touted as ‘smart’ and renting as ‘dumb’ but that’s not always the case. Purchasing a home can be a good decision, but some experts believe that it’s a bad financial decision and that the idea of home ownership is overrated.
Some things to consider when deciding whether to rent or buy include the fact that when you pay off your mortgage the home belongs to you. If your home has appreciated more than the taxes, mortgage and interest you’ve paid in – you’ve earned a return or simply break even.
Keep in mind that owning a home also qualifies you for tax credits that can offset some of the costs. But, even though you may own your house outright, you’ll still pay a significant amount of taxes and interest.
You should also realize that renting isn’t exactly “throwing your money away.” You get a place to live and you don’t have to pay for issues such as repairs and maintenance. So, rather than make a decision on what the headlines are saying about home ownership being the best route, you should consider your current situation.
Figure it out by researching the pros and cons of homeownership, crunching numbers and taking a long, hard look at your finances and lifestyle. You may be moving from place to place in your career and don’t need the hassle of putting your house on the market every year or so.
Consider the cost of housing in your area. Houses may be too expensive for your pocketbook right now, so it could be better to rent. But, renting may also be expensive and owning a home might be the better option.
Can you get more of a return on a home investment or by investing your money in the stock market or other methods of investing? All of these caveats must be considered before you should make a final decision on whether to buy or rent.
Your situation isn’t like others and you need to think about where you want to live, what type of house and environment you’re looking for and how it will all pan out in the future. In the end, know that sometimes it’s best to rent rather than buy – it all boils down to what feels right to you.