“Should I buy a house or just rent?”
That’s a question that has been around for a long time and will likely remain a hot topic for many years yet to come. The reason there will never be one right answer is because the housing market is constantly changing and evolving just as we do. When facing the decision of whether to purchase or rent a home, there are many things to consider before you reach a verdict.
The biggest question you want to ask yourself is whether you are financially ready and able to dedicate the time to responsible home ownership. Home ownership has many great benefits but you need to be in a financially stable situation to continue making payments and you need to be able to keep up with the maintenance a house needs. Even new construction will need maintenance. As for time in one area, I wouldn’t worry about that – you can always move and use your purchase as an investment property – thereby investing even more in your future.
Other important factors to consider include the following:
- What are the current mortgage rates? If rates are under 7% (which they currently are although they are rising) purchasing a house is almost always a better option (given the rest of your financial situation, of course).
- Which option will provide you with the ability to save more money for other important needs and interests (retirement, travel, college savings for children)?
- How will a purchase will affect your taxes? The New York Times states that “property taxes, the interest part of the mortgage payment, and in some cases, a portion of the common charges, are tax deductible.” This is one of the biggest benefits of home ownership.
- What kind of maintenance will your purchase need?
- What is your area cost of living? How does renting in one neighborhood compare to owning? How does that neighborhood compare with other area neighborhoods?
Once you’ve put careful consideration into the various factors, take the time to calculate all of the costs associated with both renting and buying. A helpful calculator can be found via the New York Times. This calculator breaks down all likely expenditures you could face with either decision, explaining all potential lost opportunity costs or potential investment profits and shows you totals over a six-year span. This is a very helpful tool for anyone who is trying to make the decision to buy or rent.
Purchasing a house can be a very satisfying feeling to have such an investment. Renting can also provide a powerful feeling for those who need the additional flexibility. Be vigilant in making your decision, but don’t be afraid. You’ll know when you’ve made the right decision for your finances and your personality and, whether you buy or rent, wherever you end up will still be home.