Buy or Rent?
Buying a home, especially your first, is a major commitment from any property buyer. It requires a major investment on your bank account, a commitment to a community, a school system, and an established culture that you must integrate yourself into. Knowing whether to buy and set down roots, or rent a home as a short-term living solution, is very important for your future. Here are questions you must ask yourself before committing to buying or renting.
Timeframe
How long do you think you will live in the area? Is this a short or long term residence? If you have dependents or family members that will be living with you, is this an ideal living situation for all in the long run?
Knowing your timeframe is one of the most pivotal things to be aware of when looking to rent or buy. If you are unsure, then renting a house, apartment, or condo will be your best bet. Buying a home has a high start-up cost and is a poor short-term investment. Most experts generally agree that it takes around 5 years for your financial benefits of owning a home to kick in. Knowing that you will be in an area for over five years may help you determine when buying a home is the direction you need to take.
The Economy
What is the current economic climate? Are mortgage rates high or low? What is the economic outlook for the near future?
If mortgage rates are low, and the timing is right for you, making the decision to buy will save you money in the long run. Talk to recent home buyers about their experiences and compare their situation to yours. If mortgage rates are high and you haven’t yet decided to buy, it might be worth renting for the short-term.
My Finances
How much of an investment am I comfortable with? What is my credit score? How much mortgage will I likely prequalify for? Can I cover 20% down payment or should I consider Private Mortgage Insurance (PMI)?
Understanding your own financial position is important in any big purchase, especially one this big. Careful financial planning is essential before deciding whether to buy or rent a home. If buying is financially right for you, and you’ve determined your own ideal mortgage amount, you may be ready to find an agent, start the pre-qualification process with a mortgage lender, and then begin your home search. If you are not in a financial position to buy, you can table that search for now and find a rental property until you are ready to buy.
The Community
Am I partial to a certain neighborhood or region? Do I have a preference for a particular school system? What is the economy of the area?
Whether you are looking to buy or rent, speaking to a realtor in the area can give you a clear idea of the area’s economy, information on the school system, and helpful background information if you’re looking at multiple neighborhoods or areas.
The final piece of the puzzle may come as the most important. Finding the right property in the right area that realistically aligns with your needs can be a deciding factor for which path you choose and what decisions are necessary to make it a possibility. What is needed in a living solution can vary widely from individual-to-individual, or family-to-family. Once you’ve defined your needs, and identified the living solution that realistically meets those needs, you can let that insight guide your decision to buy or to rent.
We’re Here When You Need Us.
-Your Perfleek Team
