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Are you trying to decide between renting and buying? It can be a difficult decision that almost everyone faces at some point in their lives. Unfortunately, there are many different facets to consider before committing. We’ve got a list for you of 10 questions that can help put you on the road to the right decision. Once you weigh all the options, you can better decide whether renting or buying is best for you.
Do you have a firm grasp of your overall financial situation? Even though the decision between renting and owning a home is more than just a financial one, your finances should play a big role in your decision. Changing your living situation would likely require some adjustments to your current budget. Your monthly payment could change, you might have a personal down payment goal, or you might need to save the first and last month’s rent. Before making a decision, you’ll want to assess your current situation and determine where you really stand. Do you have room in your budget to pay more in monthly payments? Do you have money saved up for repairs or emergencies? Take a realistic look at your finances. Consider your current employment situation as well. Job stability is critical. If you just applied for a new job or you’re considering a promotion or a move to a new city (or even a new location in your current city), you might want to rent.
How much should you spend monthly? One of the first things people look at when deciding between renting and owning a house is the monthly cost of each. In some places in the United States, it can actually be cheaper to own a house than to rent, at least at first glance when you compare costs at face value. Be sure you understand the big picture and what you will spend overall. Try to realistically predict what your decision will cost you each month.
What will you spend on repairs and maintenance? Whether you’re buying or renting, assess the state of the property before you decide to live there. When you own the home, you are ultimately responsible for repairs and maintenance. And of course, if you rent, your landlord will be accountable. In either case, regular repairs of some sort are inevitable. Be prepared and realistic about the maintenance you’ll be likely to face. And be sure you are confident in the person who will take on that role.
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Are you prepared for increasing costs? Costs go up over time, regardless of whether you rent or own. There is always some chance that your rent will go up over time as the landlord pays more in property taxes or as they invest more of their money into fixing up the property to increase its value. Homeowners are subject to increases in property taxes and home improvements as well. In either case, it’s wise to be prepared for costs to go up over time.
Are you informed about tax benefits? Owning a home comes with additional costs, but also with some tax benefits that renters do not have. For example, homeowners can deduct their mortgage interest from their tax returns. For most people, the tax perks that come with home ownership would not be significant enough to compel anyone to make the decision to buy. But they are perks. Stay informed about any potential tax benefits so you can take advantage of them when you have the opportunity.
What do you really want in a home? It’s easy to stay focused on dollars and cents. But don’t forget the simple things: Consider your basic living preferences when it comes to renting or owning. Do you want a yard? Do you have pets? How many hours per day do you spend at home? How often do you travel on weekends? Do you feel committed to the city you live in? Is there any chance you might be relocated for work? Once you buy a house, you’re making a commitment to live there and pay the mortgage. Be sure and take these smaller details into consideration before you decide.
Are you attracted to flexibility or stability? Owning a home can limit the amount of flexibility you have in your lifestyle. Rental agreements usually have a 12-month term that allows you to renew (or not) at the end of your lease. This flexibility can be great if you are still unsure of where you want to settle down and live over the long term. Conversely, owning a house can offer more stability, which may be attractive to you and your family. Living in the same location for years can allow you to really get to know your neighbors and feel like a part of the community.
What are your lifestyle and privacy preferences? When deciding between renting and owning, consider your lifestyle preferences. For example, you might prefer to live in a rental unit because of the amenities it offers, like a pool, a gym, or organized community activities. On the other hand, when you own a home, you'll most likely have more personal space without having neighbors just on the other side of a wall from you.
How much freedom will you have to express your personal style? Typically, when you rent, you cannot personalize the space to fit your own style and taste. Some landlords do not even allow painting without getting specific permission. Owning a house gives you the opportunity to put your own personal expression into play. However, even some homeowners do not have free reign to paint the exterior of their homes due to strict homeowner association rules. Do the research before you decide to buy or rent. Ask the landlord or the HOA what kinds of rules you will have to follow when it comes to decorating the interior and exterior of the home in question.
Are you ready to commit? The choice between renting and buying is not simple, nor is it a decision that can be considered from a purely financial standpoint. Consider your finances of course, but also look at your personal preferences and lifestyle choices. Renting is generally a commitment that lasts six months to a year. Buying a home has long-term consequences. Wherever you are in your personal journey, taking an honest look at your life and answering these questions might help you make a decision you can be happy with for years to come.