You’re about to move out of your parent’s home and are going out on your own. You’re faced with two choices. You could take out a mortgage and buy a house or rent one.
Which is the best option for you? That depends on your situation. Buying a home is a huge commitment.
There’s a lot you need to consider before you take that step. We can help you weigh the pros and cons of buying vs. renting.
Check out this homeowners guide to learn if you should start gathering up the money you need to take out a mortgage and buy the home of your dreams.
Rent or Mortgage
Hardly anyone can pull money out of their pocket to buy a house. They have to take out a mortgage. The good thing is that once you pay off your mortgage, the house is 100% yours.
As you pay off the debt, you accumulate credit and home equity. You can use this equity to move to a larger home in the future, or put it toward your retirement.
If an emergency comes up, you guessed it. You can use your home equity to solve your problem. Renting, on the other hand, is often called “dead money”.
You get nothing back for the cash that you put into it. You do get a little more freedom, however. For example, if you stop being able to afford your rent, you can pack up and move to a cheaper place.
Another positive with taking out a mortgage is that you’ll have a fixed payment that you hand over each month. Your rent can fluctuate every time you renew your lease.
There are some hidden fees involved with buying a house. Most of these costs are centered around repairs. If your hot water heater goes out in your rental property, the landlord is required to fix it.
If you own your house and your hot water heater goes out, you’ll have to spend money out of your own pocket to make the repairs. You might be able to save some money if you’re handy, but not everyone has that option.
Cash isn’t the only currency involved with repairs. You’ll have to spend your weekends off mowing your lawn, fixing broken appliances, painting, etc. A homeowner’s work is never done.
Can Your Wallet Handle Buying?
When you rent a property, you’ll need to have the first month’s payment ready to go along with a security deposit, and pet fees. That sounds like a lot, but it’s still less than what you’ll need for a down payment on a house.
How much down payment you’ll need depends on your credit score. If it’s not up to snuff, you may not even get approved for a loan. So, if you have a poor credit score, it might be a good idea for you to work on that before you try to buy a house.
The house you get may also need some work, which costs money. When renting a house, the landlord will have to take care of any updates the place needs.
How Long Will You Be Settling Down?
Consider owning a home if you plan to stay in the same place for a while. If you’re thinking about moving on in two to three years, it might be a better idea to stick to renting for now.
To this end, you need to plan for the future. If you and your spouse are contemplating starting a family, you can’t go small. If you do, you may have to pack up and move to a bigger place.
Your destination is also important in this regard. You want your kids to have access to good schools, so you have to consider your district.
You Can Do What You Want with the Place
The one advantage of buying vs. renting is that you own the place. If you want to paint your walls pastel pink, go for it. If you want to add an addition to one of the bedrooms, that’s your choice.
Rental places usually have restrictions in place when it comes to dog breeds. When you own a house, you can have as many pits as you want.
Most rental homes have strict laws against exotic pets as well. You can have snakes, birds, whatever you want when the house is yours.
Do You Have Any Savings?
If you don’t have at least six months of expenses saved up, it’s not a good idea to take the plunge and buy a house. You might come up a little short on the down payment.
Chances are something is going to be wrong with the house when you move in. An emergency could come up. You need to be prepared for anything.
If you want it, Go for it
At the end of the day, if you feel like owning a home will make you happy, go for it. You can always save up money and worry about the finer details later.
Your home is where you build your life. If you don’t want to stay in a place that you don’t actually own, do what you think would be best for you.
Is Buying or Renting Your Best Option
Buying or renting a home? Are you trying to figure out what your best option would be? There’s no right or wrong answer.
If you like the idea of owning a house and want the freedom that goes with that, go ahead and get the mortgage. The upfront cost is pricy, but it will allow you to build equity that you can use for future expenses.
Once you’ve bought your house, you’ll need to spend some time fixing it up. Check out the home improvement section of our blog daily to learn how to get started.