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To Rent or to Own?

How to Wear a Mask


11/14/2019 8:18:00 PM

To Rent or to Own?

To rent or to own -- that is the question

Have you started noticing most of your friends buying homes? Are you itching to own as well? Or are you comfortable renting?

White picket fence. Two or three children. A good dog. Peaceful living in a beautiful home. This is the American Dream. But are you ready for it? Or should you continue renting?

Use this checklist to determine if you are ready to buy:

 

Yes

No

Question

 

 

Are you out of debt? Or have low debt overall?

 

 

Do you have a 3-6 month emergency fund saved?

 

 

Do you have enough money for a 10-20% down payment on a mortgage?

 

 

Are you prepared to stay in the same location for the next 5 years?

 

 

Do you have two years of W-2s?

 

 

Do you have a good credit score?

 

 

Do you have moving expenses saved up?

 

 

Do you have a stable job?

 

 

Will you have money left over after you buy a house?

 

There are many considerations to make about whether you are ready to buy a house. It’s definitely not a purchase you can make on impulse. But even if you determine that you are financially fit to buy a house, are you sure owning a home is right for you?

Here are some advantages of buying a house:

  • You aren’t just throwing away your money to monthly rent – instead every payment brings you closer to owning your home
  • Your house will likely increase in value overtime – what you buy for $250,000 today could sell for $300,000 later on
  • Tax benefits! Your mortgage interest payment counts as a deduction when you file your tax return
  • Complete freedom to renovate or change your house however you’d like
  • More privacy
  • Pride that comes with attaining the American Dream

Here are some disadvantages of buying a house:

  • You are responsible for fixing damage
  • It’s harder to relocate should your career or family undergo a change
  • More expensive on average – you’ll have things like homeowner’s insurance, HOA fees, property taxes, utility bills, etc.

 

So what about renting? Why should you rent? Here are a few situations you may find yourself in that may indicate you should keep renting:

  • You’re paying off tons of debt
  • Your career requires you to travel frequently or relocate
  • You don’t have time or energy to put into the upkeep of a house
  • You plan on starting a new job soon
  • You need flexibility

Here are some advantages to renting:

  • More flexibility
  • More city-living options
  • Moving out is easier
  • Renter’s insurance is about the only insurance you will need
  • You may save money
  • Landlord is responsible for upkeep

Disadvantages to renting:

  • Bound by the rules of the lease
  • You can’t make changes to the property unless agreed upon with the landlord
  • You get no return on investment
  • Little control over rental fluctuations impacted by inflation and other factors
  • No guarantee that you will be able to renew your lease

We hope this list helps you in the big decision to rent or buy! If you do decide the time is right to buy, happy hunting!