One of the first questions faced by anyone on the search for a new home is whether it is better to buy or to rent. Many people will tell you that it is a no-brainer: if you rent you are wasting your money when instead you could be paying close to the exact same amount for something which at the end of the day is yours, to do with as you wish.
The first thing to consider, which we have noted already, is whether you are actually able to afford the costs of owning a home. Remember that it is not just your monthly loan payments which make up the costs of owning a home, you also need to pay for home insurance, in some cases you will need mortgage insurance and there are also taxes to consider. This is besides the fact that you will also require a, sometimes rather sizable, down payment.
When renting, it is unlikely that you are responsible for routine maintenance. Instead, when you are in need of upkeep or repairs it is normally the responsibility of the landlord. There are some rentals which include utilities, where if you are the owner you are responsible for the phone, cable, power, gas, water and any other utilities which the property may have.
There is also your personal situation to consider. If you are relocating to a new city, there is a good possibility that you are unsure which neighborhood or area of town you want to live in. Renting until you get a feel for the city, then purchasing a home once you are more familiar with it makes more sense.
If the interest rates on mortgages rates are high, you may not be able to afford a home, or the homes you do qualify for may not be to your liking. In this case, it may be best to wait until the interest rates improve.
If you are in the process of a transition, such as searching for a new job or getting a divorce, you may only be temporarily living in that home and recouping the costs of buying then selling that home is unlikely.
You may be in a ‘Seller’s Market’, which is when homes sell quickly, interest rates are normally quite low and the price of homes sky rocket. When buying in this type of market your offer must be made almost instantly and there is very little room for negotiation as to price and who pays what with regards to closing costs. What goes up must come down though so waiting until the market improves may be best.
In a down, or buyers market, there are many properties available but very few buyers. The economic crisis has effectively frozen the housing market in the last few years as prices have dropped through the floor in the last few years. Buying a home in a buyer’s market is at best a gamble because if you wait too long, the market may just recover and prices will rise, while buying while the market is still in decline may mean that in the short term you have paid too much for your home.
At the end of the day it is always advisable to enlist the help of a professional who is able to help you weigh all the options and do your sums accordingly, secondly remember that buying a property is a long term investment. The gains are not really apparent when it comes to a monthly cost comparison, but at the end of the day – the decision is yours!