Buy or Rent? 4 Considerations for Making the Best Choice
by Shawn Clayton
on Friday, December 15th, 2017 at 10:47am.
Making a decision to rent or buy a home is one that most people will face at least once during their lifetime. But like many common problems, this decision is not always an easy one to make. For those who are currently trying to decide whether to rent or purchase their next home, or those that will have to do so in the near future, the following considerations can clarify the process and help ensure the right path is chosen.
What is the state of the residential real estate and rental housing markets in your area?
The first point to consider when trying to decide between renting or buying is to determine what is happening in your local real estate market. If inventories are tightening up and a seller's market is developing, prospective buyers may have to pay top dollar when buying a home, which is a scenario that often makes renting a better option.
On the other hand, if inventories are growing and prices are moderating, buyers may be able to purchase a great home at or below market value.
What does your five-year life plan include?
The costs involved with purchasing a home can be substantial and take as long as five years to recoup. If the home is purchased at the top of the market, it can take even longer for the home to increase in value enough to reimburse the buyer for these costs and allow them to break even or make a profit when selling the home.
Buyers who know they will need to move within five years of purchasing a home may find themselves in an upside down position, should they need to sell. So before making a final decision to buy or rent a Howell home, consider what changes you are likely to face in the next five years. If employment changes, loss of income, or relocating for personal reasons is likely, then renting may be the most beneficial choice.
What is your current financial situation?
Buying a home is most profitable when the buyer is able to do a cash purchase or make a large down payment to put themselves into a positive equity position. In addition to the amount of cash available for the purchase of a home, prospective buyers should also make sure they are able to obtain a low-interest, fixed-rate mortgage and make sure any home they are considering is easily affordable on their current income.
There are also considerations to be taken about money needed for a down payment. Additionally, prospective buyers who have unresolved credit issues or large amounts of outstanding debt may need to rent their next home in order to give them time to take care of these matters.
What benefits will buying or renting provide?
Another excellent consideration when deciding whether to buy or rent is to determine which choice will offer the most benefits.
People who travel frequently may find the demands of owning and maintaining a home make it difficult to do so. However, those who are eager to decorate and maintain their own home often feel that other areas of their life will benefit when they become homeowners.
To get more insight into whether buying or renting a home is the best course of action for your individual situation, take time to discuss your housing dilemma with a caring, competent real estate professional before making your choice. Your agent will be able to provide you invaluable details about current and expected housing trends in the area for both the for sale and rental markets and help you make the choice that is best for you.