In this tough economy, more and more people are pondering the big real estate question...should I rent or should I buy? Even those who have a substantial savings are struggling with this decision. Years ago, this wasn't even a consideration and the advice would've been to buy, hands down. But with this shaky economy, things have certainly changed and the renting market has flourished as a result. So what to do when you're faced with the rent or buy decision? Here's a bit of advice to help you make an informed decision.
From the get-go, it's important that we dispel the biggest myth when it comes to renting or buying. Renting does not equate to throwing your money away. You are paying for a service, in the same way that you would pay for your car to be serviced. You need a place to live, and renting provides that for you. As long as you are paying a competitive price for the service, you are paying market value for it. Further to that renting has many advantages over buying, one of the biggest being the flexibility to move whenever you need to.
Of course, there are major advantages to buying too, like seeing the value of your home appreciate over time. But with the recent economical downturn, there's no guarantee this will happen. Many homeowners who purchased during the recent housing bubble now owe more on their mortgage than the home is actually worth, and if they ever want to sell they will either have to wait until the market turns around or settle for a loss on the property. That's not to say that there aren't good housing investments available now, and in some cases buying can be cheaper than renting.
Ultimately, when making the decision as to whether you should rent or buy, there are many factors to consider. Ensure you are making the right decision for your situation by asking yourself the following questions:
First, how stable is your employment?
Before you take on the financial commitment of a home, it's important to take a look at the stability of your current employment. It's certainly a difficult time for homeowners; with the economical downturn we've seen job losses across the board and as a result a huge increase in foreclosures. It would be a substantial worry to lose your job with the obligation to pay the outstanding months of your renter's agreement, but it would be even more worrisome knowing that you have a mortgage and home equity at stake. Before purchasing a home, you should have a reasonable sense of job security, if for any reason you see trouble on the horizon regarding your employment, why not hold off until there are signs of economic recovery?
Can you financially support a home purchase?
Even if you have a decent amount of savings, the financial implications of purchasing a house will considerably change your financial situation. Before jumping in with both feet, look at the total cost including the down payment, closing costs, taxes, moving costs, as well as any auxiliary costs after moving in. After you've got a figure, take a look at what your savings balance will be after that money is spent. Are you left with enough cushion to feel comfortable until you can start ploughing money back into your savings? Don't forget that as a homeowner you will also need cash in savings คอนโด กรุงเทพ to fall back on for any unexpected home repairs. Once you know what the initial outlay is, you should also look at the monthly cost of the mortgage. Compare the cost of the monthly mortgage to that of the rent and see if you can afford to shell out for home ownership. Keep in mind that the monthly interest on your mortgage payment is tax deductible...and some of your closing costs may be deductible too!
What are your reasons for wanting to own?
Now that we've dispelled the myth that renting is throwing your money away...what are your concrete reasons for wanting to own a home? If you are looking for a lifestyle change, would that change be made possible by moving to another rental property? Would owning a home improve your quality of life? Is the financial responsibility something you want to take on? Make a list of the ways that your life would be improved as a homeowner and discuss the pros and cons of all of your reasons.
Buy now, or wait?
If you've answered all of the previous questions and still feel buying is the best option for you, the only question left to answer is whether to buy now or wait until the market bottoms out completely to get the best deal. Despite the recent indications that house prices have improved in recent months, the economy is still weak. The overhang of foreclosures will still present a considerable drag in the housing market for the foreseeable future, so it's not likely that house prices will go up significantly anytime soon.
After a thorough discussion on the questions above, you should have a much clearer sense of whether renting or buying is right for you. Whatever decision you come to, you can rest easy knowing that renting is not throwing your money away but merely paying for a service that you need, right now. Those circumstances may change in the future and at that time you can revisit this post and reassess your answers!
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