If you’re at a point where you’re debating between home ownership vs renting, you’re not alone. It’s a big decision to make, especially considering the monetary investment that’s required. The best way to figure out what to do is to weigh the options side-by-side and consider what’s best for your particular situation. So how exactly do you go about making such a huge decision?
Consider how long you’re staying in one place
If you’re planning on living in one place for a short period of time, or you’re not sure how long you’re going to stay, buying a house may not be in your best interest. It’s not always the easiest process to buy a house, and it would be a shame to go through the entire process only to have to sell it in the near future. Renting gives you the opportunity to leave at any time without the huge hassle.
Think about the initial cost you can afford
With a house, you have to put down at least 10% of the cost, which typically totals up to around $15,000 or more. When you rent, it’s usually a month and a half worth of rent plus any additional deposit such as one for a pet. If you can’t afford to put down a huge chunk of change, you’re better off renting.
Factor in long-term maintenance costs
You may want to put some money into a rental just to spruce it up a bit, such as if you want to paint the walls, but it’s nothing like what you would pay for long-term maintenance on a house. When you own a house, the repairs fall all on you whereas the costs in a rental typically fall on the landlord.
Think about additional expenses
When you rent, you have the base monthly expenses such as utilities, food, and other miscellaneous bills, but with home ownership, you also have to consider additional expenses such as homeowners association fees, taxes, etc. If you can afford those long term expenses for a home, it could be worth the investment.
Decide how much time you have for upkeep
The larger the space you live in, the more time you’re going to have to set aside for upkeep. This not only includes the inside, but the outside as well. If you have a good amount of time to devote to the care of a home, a house is definitely something to consider, but if you’re rarely around, renting a smaller space might be a better option.
Look up your credit score
A credit score plays a huge part in buying a home, and if it’s not as great as it could be, you’re better off renting. Some landlords won’t even look at your credit score, so it’ll give you more time to build it up to the point where you feel comfortable applying to buy a home.
When it comes to the great debate of home ownership vs renting, it primarily comes down to your financial situation and what you can afford to pay not only every month, but also in terms of emergency situations and long term expenses. Figuring out what you can afford to pay is a great place to start when determining where you stand.