Choosing to rent or own a home is a very personal decision and there is not a one size fits all answer. Furthermore, the decision to rent or own can change throughout your life based on a variety of factors. If you find yourself unsure of whether to rent or purchase your next place, check out these seven things to consider:
Will you Qualify for A Mortgage? Unless you have cash available to purchase a home, you will need a mortgage. If you are even considering purchasing a home, start with seeing if you qualify for a mortgage and for how much. Then compare that will your wants and needs to see if it makes sense.
Can You Afford Closing Costs? Truth is, there are more costs involved in purchasing a home than just the down payment. Closing costs are a part of the transaction and they can be expensive. Expect to (and plan) to pay up to 3% of the home's purchase price on closing costs.
Can You Afford the Neighborhood? In addition to your mortgage payment, you may be responsible for things such as homeowner association fees, property taxes, commute costs and insurance premiums.
How Long Are You Planning to Stay? Unless you are planning to stick around for a couple of years or more, it might not make sense to purchase a home, unless you don't mind losing money. It often takes time for home values to climb, and in addition, you are responsible for costs as a seller, too.
How Important is the Freedom to Make the Space Your Own? Depending on where you rent or who you rent from, you may not have many or any freedoms to change anything in the rental property, including paint colors.
Do You Have the Time (and Money) for Maintenance? Owing a home requires regular maintenance, which costs time and money. Furthermore, there is always the possibility of unexpected repairs that also can set you back hundreds or thousands of dollars. One perk of renting is that if something needs to be fixed or maintained, it is the landlord's responsibility.
Are You Willing to Risk the Market? Are you risk averse? Does the thought of potentially losing money if the housing market depreciates make you stressed? This is an important consideration as well.