Should you rent or buy a house? Most people will sooner or later find themselves asking that very question. This is because your house is one key aspect of our financial lives, whether living as a single person or with a family.
In our 1st article of the “To RENT OR BUY” series, we looked at the Pros and Cons of the decision to the age-old question… So before you can answer and decide which of the two is a smarter decision, here are some three more questions that we will discuss in order to guide you in getting the right answers:
Do you see your house as an investment?
If you see your house a piece of investment that you will later cash in on, then the buy option will be great for you. Like any other investment, houses do increase and decrease in value and they can be sold off at a profit (or a loss). So as to avoid a loss, the buying option in this case will be subject to many factors such as market conditions, property location and time duration before one can liquidate the investment.
Do you have accurate cost figures for rent vs buy options?
Most potential home buyers make the mistake of comparing a month’s rent to a month’s mortgage payment. Such a simple comparison is not enough to have you decide which of two options is more cost-effective. This is because many people don’t have all the numbers to make a fair comparison. There are many additional fees such as the principle interest, property insurance, property taxes, homeowners association fees and house maintenance fees which all add up to the buy option. Having included all the necessary cost figures, then can you proceed to decide on the option that will save you extra dollar?
Can You Handle the Stress?
Buying a home is a more stressful activity compared to renting. Most home buyers find themselves burdened with concerns of changes in one’s financial state, having a large mortgage or loan, or having to change residence or city, maintaining the house or the yard. It is often advisable for prospective home buyers to buy when their stress levels are lower. Stress overload can lead to missed payments which can result in destroyed credit or even losing the home.
The decision to rent or buy is very much a lifestyle decision as it is an economic decision. Either decision could be informed by the individual’s life stage’ such as getting married, starting families and being able to afford to do so.