How to Decide Between Buying and Renting
Consider real estate market conditions., Determine if you are prepared for the extra financial obligations associated with home ownership., Evaluate your career and lifestyle.
Step-by-Step Guide
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Step 1: Consider real estate market conditions.
Research home values in the area you want to purchase by talking to a local real estate agent.
Home values are impacted by the local school system, employment and business development.
Talk to a real estate agent about these issues in each area where you search for homes.
If you plan to stay in an area for longer than 5 years, buying a home is a good choice.
Renting is a better option if you are planning to remain in an area for less than 5 years.
Your realtor can also inform you if the real estate industry is a buyer's market or seller's market.
In a buyer's market, there is a large inventory of properties available for purchase that have been on the market for several months.
Purchasing a home in a buyer's market allows for flexibility in negotiating price.
In a seller's market, there is a limited number of homes available for purchase and buyers have less negotiating power. -
Step 2: Determine if you are prepared for the extra financial obligations associated with home ownership.
Before choosing to buy, review your financial situation to decide if you can afford the extra expenses home ownership brings.
Evaluate your ability to pay monthly expenses and whether you have enough savings to deal with emergency expenses.
The only financial obligations required to rent are the security deposit and the monthly rent.
Renter's insurance is an optional monthly expense.
To purchase a home, you will be required to make a down payment of 3 to 20 percent of the cost of the home you are buying.
Buying a home also involves paying closing fees at the time of purchase.
These fees include attorney's services, the real estate broker's commission, title services, appraisal and survey fees.
Homeowners are responsible for paying the monthly mortgage (principal and interest) plus insurance and property tax.
Some communities also require a homeowners (or condo) association fee that is paid monthly.
For renters, all maintenance on an apartment is provided by the landlord.
Some apartments also include all or some of the utilities in the price of the rent.
When you buy a home, you are responsible for paying for all of the maintenance on the property and for any renovations made to the property.
You also pay the monthly fees for all utility services.
Homeowners are liable when someone is hurt on their property.
One of the benefits of renting is that the liability of injured third parties lies with the landlord. , Home ownership may not be practical if you travel a lot for your job and are not able to keep up the maintenance on a home.
Job security is an important factor when considering the purchase of a home.
You may want to rent until you have been on a job for 2 to 5 years and you plan to remain with your employer for several years.
If you plan to stay in an area for longer than 5 years, buying a home is a good choice.
Renting is a better option if you are planning to remain in an area for less than 5 years.
Renting allows you flexibility for changing jobs and relocating to a different area while buying requires a commitment to living in one area. -
Step 3: Evaluate your career and lifestyle.
Detailed Guide
Research home values in the area you want to purchase by talking to a local real estate agent.
Home values are impacted by the local school system, employment and business development.
Talk to a real estate agent about these issues in each area where you search for homes.
If you plan to stay in an area for longer than 5 years, buying a home is a good choice.
Renting is a better option if you are planning to remain in an area for less than 5 years.
Your realtor can also inform you if the real estate industry is a buyer's market or seller's market.
In a buyer's market, there is a large inventory of properties available for purchase that have been on the market for several months.
Purchasing a home in a buyer's market allows for flexibility in negotiating price.
In a seller's market, there is a limited number of homes available for purchase and buyers have less negotiating power.
Before choosing to buy, review your financial situation to decide if you can afford the extra expenses home ownership brings.
Evaluate your ability to pay monthly expenses and whether you have enough savings to deal with emergency expenses.
The only financial obligations required to rent are the security deposit and the monthly rent.
Renter's insurance is an optional monthly expense.
To purchase a home, you will be required to make a down payment of 3 to 20 percent of the cost of the home you are buying.
Buying a home also involves paying closing fees at the time of purchase.
These fees include attorney's services, the real estate broker's commission, title services, appraisal and survey fees.
Homeowners are responsible for paying the monthly mortgage (principal and interest) plus insurance and property tax.
Some communities also require a homeowners (or condo) association fee that is paid monthly.
For renters, all maintenance on an apartment is provided by the landlord.
Some apartments also include all or some of the utilities in the price of the rent.
When you buy a home, you are responsible for paying for all of the maintenance on the property and for any renovations made to the property.
You also pay the monthly fees for all utility services.
Homeowners are liable when someone is hurt on their property.
One of the benefits of renting is that the liability of injured third parties lies with the landlord. , Home ownership may not be practical if you travel a lot for your job and are not able to keep up the maintenance on a home.
Job security is an important factor when considering the purchase of a home.
You may want to rent until you have been on a job for 2 to 5 years and you plan to remain with your employer for several years.
If you plan to stay in an area for longer than 5 years, buying a home is a good choice.
Renting is a better option if you are planning to remain in an area for less than 5 years.
Renting allows you flexibility for changing jobs and relocating to a different area while buying requires a commitment to living in one area.
About the Author
Eric Lee
With a background in arts and creative design, Eric Lee brings 5 years of hands-on experience to every article. Eric believes in making complex topics accessible to everyone.
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