Buying a home is one of the most important decisions of your life. It’s not about “when” but “who.” Who are you? What is your position in life? These are the questions that will determine when you should venture into homeownership.
It’s not about an age you need to reach first. It’s about a person you need to become before buying a home.
Owning a home does have advantages for building wealth in life, but I advocate asking yourself these five questions before choosing to buy a home. If you can’t answer yes to each of these questions, put off buying a house.
- Are you out of debt?
- Do you have a full emergency fund saved?
- Do you have enough cash for a 10–20% down payment on a mortgage?
- Do you plan to stay in the same location for more than three years?
But what about renting? is it a waste of money?
The answer is no, renting gives you flexibility. Most rental contracts are only a year long. If you aren’t ready to commit to living in one place for many years, renting lets you stay as long as you want.
Also worth restating is the freedom renting gives you from the unit maintenance. When rented, you don´t have to worry about the maintenance of pipes, appliances, leaks, and a big, etc. of house maintenance. In this particular case, it’s a big benefit to being a renter.
Finally, you can make renting work to your advantage financially, too. If you live in a market where you can rent an apartment for substantially less per month than you could own a home, you can invest the difference.
Is it better to rent or buy?
The answer to the rent vs. buy a home debate isn’t so cut and dried. Here are five questions to ask when considering renting vs. buying:
- What can you afford?
- How long do you plan to stay in the home?
- Do you want stability or flexibility?
- Can you afford to be responsible for home repairs/maintenance?
- What are your financial, career, and family goals?
If you’re moving to an unfamiliar city, have an unstable job situation, or don’t know what neighborhood will feel like home, renting for a period of time can be a great option. During that rental period, people really get a sense of what they like or don’t like, and we can also start exploring different purchasing options during that time.
For clients who have a changing personal situation, such as getting married or planning to have a child soon, I encourage them to look at properties they’re not going to outgrow quickly.
Another consideration: Can you afford a home that will fit your lifestyle in the next few years, or will a tight budget limit your options? For many people, renting or buying comes down to what they can afford at the moment. It may be better to wait or rent for a little while until you can afford the home you can live in for some time or grow into with your family.
In Altea Real Estate we are ready to assist you with your purchase or rent. We are looking forwarded to hear from you.