When it comes to building your net worth and making monthly payments, buying a home makes more financial sense than renting. The question is, what are the major steps involved in buying a home?
There's no easy answer because there are so many factors involved. It depends on your income, credit standing, the state of the real estate market in your region, cost of living, mortgage rates, and more.
That's why anecdotal experiences from those around you can only take you so far. Their situation was unique and yours will be too. That doesn't mean you shouldn't seek out their advice about whether you should buy or rent. What it means is that you should take it with a grain of salt because the market is always changing and evolving.
With that being said, this article will share the things you should consider before making the decision about buying or renting your next home.
This is one of the major considerations when it comes to buying or renting a home. Your income and credit determine whether or not you're seen as a risk to banks and landlords. In some cases, even if you're making a good income, your credit can hold you back.
If your credit is an issue, it may be a better idea to rent in the short term while you build up a good credit history. If you go ahead and try to buy a home, the pre-approved loan you qualify for will be smaller and have a higher interest rate.
On the other hand, you may not have an income that's as large but a great credit history. You'll be able to qualify for a larger loan with better terms. That means you can move into a new home and still pay less for mortgage than you would if you were renting.
Long term plans:
Though there's a lot of pressure for younger generations to settle down and get serious with their lives, it doesn't matter if that's not what you want.
Before giving serious thought to buying a home, think about what you want over the long term. Are you planning on living in your current city for at least the next five years? Is your job stable enough to ensure you make all your mortgage payments? Do you have dreams of traveling the world for a year and don't want to be strapped with a huge monthly payment?
The truth is that you can buy a house at any stage of your life so if you're not ready for that commitment or it's not in line with your plans right now, renting may be the better option. If, on the other hand, you're ready to settle down and start a family then a home may be just what you need.
Finding a real estate agent:
Whether you're renting a home or buying, a real estate agent is an important part of the process. When you search for homes online, there's a listing price but they're not set in stone. Find a talented real estate agent, to help you understand the prevailing market conditions and whether or not the places you're interested in are too expensive, a good deal, or just right.
In addition to helping you assess the properties you're already interested in, they can help you find hidden gems. The key is to get a hold of an experienced agent you can lean on to make the buying or renting process much easier.
The Community you'll be living in
The area you'll be living in is just as important or even more important the actual home you'll buy or rent. Does it have the amenities that you're used to? Is it easy to go out for a night on the town? Is it close to downtown?
Another consideration is the crime rate. Is the community safe for you and your loved ones? Even if the home is beautiful, it becomes less valuable if there are no amenities and a high crime rate. If the properties you can afford to buy lack the things you need then it may be a better (and safer) choice to rent.
Once you have considered all these factors you are ready to make the decision buy or rent?