Ah, the age old question.
Every person you ask “should I rent or buy?”, is going to give you recommendations based on their previous experiences. If they don’t take the time to ask you about your situation and your goals, their advice probably isn’t for you.
Here are a few questions you can ask yourself when you’re deciding if you should rent or buy:
• Where are you at in life?
• Why do you think you should buy?
• Do you have enough money for a down payment on a house?
• Will your career possibly require relocation?
• Are you happy where you’re currently at?
Without asking yourself the why behind your moves, it’s a lot easier to make the wrong decision.
Let’s look at some of the pros and cons of renting and buying:
Buying a House
Increasing home value
Decreasing home value
No property taxes
No maintenance costs
Allows flexibility in location
No closing costs
Rent is an ‘unrecoverable’ cost
Rent price could change
One of the biggest factors in deciding to rent or buy could be how long you are planning to live in a certain location. If you know that your career might take you to another city or you aren’t fully happy with where you’re at, it might make sense to rent for a while before you decide to plant your roots in one area. Yes you can still sell your house and move if you decide to, but it’s a lot more work and costs a lot more in closing fees than just ending a lease.
Another factor may be the local real estate market. If you bought a house today and you planned to move in a few years, the real estate market may be down when you decide to move and you could be forced to sell your home for cheaper than you bought it. You could also look at the flip side - the market may improve and you’re able to sell your house for a profit.
If you’re in your 20s and not sure what’s next in life - it may make more sense to rent for a while so you aren’t spending money on a down payment and can also take advantage of opportunities that pop up if they require relocation.
Being in the “later” stages in life, buying a house may make more sense to begin building equity and having an asset under your name.
Ultimately, taking the time to evaluate your decision and weighing the pros and cons will help guide you to making the right decision.
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