“What To Consider When You Rent Or Buy A House” written by Mike Marko
Are you thinking that you should rent or buy a house? Well, you’re not alone.
In fact, it’s a question most consumers ponder at one time or another.
But the correct answer varies as much as individual life circumstances do.
For example, most young people begin their independent lives renting a house. This is because of the hefty upfront costs associated with buying a house.
On the other hand, those who are at an age to build careers, save money, and start families prefer buying a house.
Then, on the end of the age spectrum, some homeowners nearing retirement choose to sell family homes and become renters again.
These things may imply that your financial state is a major factor. But it’s not the only factor you need to consider when you rent or buy a house.
In this blog post, you’ll learn more about the factors you need to consider when you rent or buy a house.
4 Factors to Consider If You Want to Rent or Buy a House
Determining whether you rent or buy a house is a personal choice. But, just like other things you decide, it still demands careful deliberation.
Your decision whether to rent or buy a house varies based on different factors. This is what we are going to discuss later on.
If you’re a renter who thinks of buying a home or a homeowner who thinks that renting will make more sense at this point, then this blog post is for you.
Through this blog, you can evaluate the relative costs, benefits, and drawbacks when you want to rent or buy a house.
1) Financial Readiness
When you think of whether to rent or buy a house, ask yourself first, “Am I financially prepared to rent or buy a house?”
This is an important query to answer when you want to rent or buy a house.
You see, when you’re thinking of purchasing a home, a monthly mortgage payment is only one aspect of financial readiness.
Another thing is that you also need a large downpayment and a good credit history if you plan to take out a loan.
Aside from that, you need to consider other housing costs that come with purchasing a house. There are other housing costs to consider as well, such as utilities, insurance, repairs and maintenance, and possibly HOA fees.
But whether you want to rent or buy a house, you shouldn’t drain your emergency savings fund.
An emergency fund with three to six months of living expenses can become essential at a moment’s notice, whether you rent or buy a house.
You must also take your personal debts into account. Your monthly debt payments should not exceed 15 percent of your gross income.
That said, if you are financially prepared to purchase a home, there is a great tax advantage. You can deduct mortgage interest, private mortgage insurance, and property taxes, potentially saving yourself thousands of dollars a year.
2) Personal Readiness
Are you tired of renting and already want to purchase a home? If that’s so, you need to take your goals, values, needs and wants into account.
Homeownership may offer a sense of pride, independence, and stability. But there is greater responsibility than renting.
In addition to reaping the benefits, after all, homeowners assume all risks too.
They are responsible for all repairs and maintenance. They take the risk that their investment may not turn as planned if the real estate market swings.
Your personal readiness will likely fluctuate with your life circumstances. So, carefully examine your needs and wants and those of your family when deciding to rent or buy a house.
3) Real Estate Market
The real estate market can have a large impact on whether you should rent or buy a house.
Ask yourself, is it a wise time to buy, based on your current needs, wants, and goals? Are you likely to get a better or worse deal if you wait a few months or even a few years?
When you choose to rent or buy a house, know that the housing market relies very heavily on supply and demand.
Each transaction, whether you rent or buy a house, involves a buyer/renter and a seller.
When there’s a high demand for properties in a particular city or state, and a lack of supply of quality properties, the prices of houses tend to rise.
When a weak economy and an oversupply of properties leads to low or no demand for housing, the prices of houses tend to fall.
Factors Affecting the Real Estate Market
Supply and demand are never an easy thing to measure in the real estate market. That’s partly because it takes a long time to construct new homes and fix up old ones to put back on the market.
Similarly, real estate is not like other industries in that it takes time to buy and sell homes and other properties. This is the reason you need to consider this when deciding to rent or buy a house.
Some of the factors that influence others to think whether to rent or buy a house include lower interest rates or borrowing costs.
When interest rates are low, people are generally willing to take on more debt. That means when they’re given the choice of whether to rent or buy a house, they may be likelier to buy.
That’s since they know taking and paying off a loan for it will be easier.
Now let’s say more buyers flood the market due to this. The demand for housing increases.
If there’s a limited supply of housing, that further encourages people in a low-interest-rate environment to buy instead of renting.
The supply of housing is in a constant state of change. Inventory may increase when people are moving.
However, housing inventory decreases during times of natural disaster such as floods and earthquakes. It also happens when existing properties are demolished.
If the location is attractive to the buyer demographic, chances are many will choose to buy instead of renting. That’s why places with overt physical beauty tend to command higher real estate prices.
But physical attractiveness isn’t the only factor here. What else is important when considering a location to rent or buy a house?
If you are ready to buy, is an affordable home available in your desired neighborhood? If so, you may want to jump on it.
If not, you may want to wait it out, even if other factors point to buying now.
A home is a long-term commitment. If you can’t see yourself in a specific home or neighborhood for at least three to five years, renting may be in your best interest until the right home becomes available.
The location should be near schools, most especially for buyers who want to raise a family and want a great school district. This is applicable whether you want to rent or buy a house.
Easy commutes to work are the icing on the cake for most people who think of whether to rent or buy a house.
Whether your preferred mode of transport is driving a car, biking, public transportation, or even walking, the commute time is a factor when you want to rent or buy a house.
In major cities, if you rent or buy a house in a location where the city is going to build a new train stop, you will see instant appreciation once that train becomes available.
It’s also likely that a train stop will bring other local amenities such as grocery stores and restaurants.
Time is the most valuable asset in the world, after all. This is why people will always pay to save time.
Final Thoughts about Rent or Buy a House
In this blog post, I discussed with you the four factors you need to consider if you want to rent or buy a house. These are the following:
- Financial Readiness.
- Personal Readiness.
- Real Estate Market.
While owning a home is often considered the ultimate dream, personal and financial readiness, the status of the real estate market, and location are all important parts of the equation.
After pondering the factors to consider if you want to rent or buy a house, you could decide whether renting or buying is better for your lifestyle.
By understanding these considerations, you can begin to plan for the future and decide whether to rent or buy a house.
However, it is never too early in the process to find an expert who can help you through the process of deciding whether to rent or buy a house. Contact me or leave a note below if you need personalized help.
If you have general questions about renting or buying a house, you can also leave them below.
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