Deciding to purchase a home? To buy… or to Rent?

A home is one of the biggest financial investments that most of us will ever make in our life time. It is understandable and common to get a little bit stressed out and anxious in the process. But, the main concern many of us have is if we should rent or buy…?

To make this a little more complicated there is no right answer! You have to work through the process and make your decision by asking yourself a few questions. Let’s begin:

1.     Can I afford it?

Having money to make a down payment is great; however it is only the first step. You need to take into consideration your monthly mortgage payments. On top of your mortgage is other costs that include utilities, maintenance, taxes, and furniture.

You have to be able to afford the purchase and the upkeep of the property you are purchasing. Financial experts say that if you do not have the money saved to buy AND carry your home; your best bet is to rent. However, if you have enough cash saved up for the initial transaction, plus the changing costs of homeownership, go ahead and buy!

2.     Am I financially secure?

To buy a home, you need to be in a financially secured position, this means: good credit, a stable income, moderate liabilities, enough cash to cover your down payment and closing costs, and liquid assets.

It is not suggested to scrounge up every last penny you own to cover your down payment costs. If you are able to buy a house without completely wiping out your savings and you have the listed points above, you are able to buy.

3.     How do I want to live?

This has nothing to do with your finances, but with the way you want to live. If you don’t mind being left with mowing the lawn, fixing the leaky faucet, and replacing your air conditioning unit, buy! However, if you would like someone else to step in when things get a little messy, you’re best off to rent.

4.     What are my financial goals?

Buying a home is a very large financial accomplishment; however it is unlikely that it’s the only one that you intend to make.  If you are looking to start a business or buy a new car, you may want to postpone your home purchase for another few years. But, if homeownership is your main focus, and you’re aware that it will affect the progress of your other goals, feel free to buy.

5.     What do I want my future to look like?

If you want to buy, you need to plan to stay in your home for at least four to five years. If you are unsure of your future and want to move around you should not settle down. However, if you just got married and are comfortable with the idea of staying in one home for a few years, go ahead and buy.

Buying a home is a serious investment and you need to thoroughly weigh all your options. Consider these 5 questions and seriously ask yourself them.

In the event that any of your answers to one of these 5 questions is renting, you need to be faced with the fact that buying is not in your best interests at the moment. If you come to the conclusion that buying is your very best option, go ahead and call up a realtor!

Happy House Hunting!

Sources:

Financial post (www.business.financial.post.com)

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