Buy or Rent: Which One is Right for You?
By Interior Savings
March 15, 2016
You’re looking for a home: should you rent or buy? The right answer is about more than the mortgage payment. In fact, finalizing the details of a mortgage is really the last step in a complex decision process. There’s a big difference between renting and owning, and the question of which is better for you is a highly personal one that will take into account not only your personal preferences and goals but also your financial picture.
- How much money can you put down? You should have at least 5% of the purchase price of the home for your down payment.
- Are you prepared for the additional costs? For example, home inspections can cost anywhere from $300 – 600 depending on the home. Legal fees can typically range from $700 – 1600. And of course you’ll want to be sure you have some money set aside in an emergency fund.
- What are your monthly housing costs? They should not exceed 32% of your gross monthly household income. Housing costs include monthly mortgage payments, taxes and heating expenses. If applicable, this sum should also include the monthly condominium fees.
- How much debt do you have? Your entire monthly debt load should not be any more than 40% of your gross monthly income. This includes housing costs, and all your other debts such as car payments, personal loans, and credit card payments.
- Are you looking for a stronger sense of place within your community?
- Are you willing and able to maintain and repair your own property and home?
- Do you want the stability of home ownership as the foundation for starting a family?
If you answered yes to any of these questions then home ownership may be a natural next step.
On the other hand, maybe you:
- Prefer the freedom to move to a different neighborhood or even a different city.
- Are anticipating a promotion at work or planning a leap into an entirely new field or career.
If this is the case, renting is probably your best bet.
Still unsure? Get in touch, and we can help you look at your options and determine what avenue is the best fit for you