We believe one of the biggest decisions a person can make is when to move from renting to homeownership. For those of you who are considering that very thing, we wanted to provide some guidance to help make that choice easier for you. Here are several factors that should be taken into consideration before you make your choice.
Your lifestyle is one of the key factors to think about when deciding between renting or buying a property. One of the most obvious benefits of renting a property is that it gives you a maintenance-free residence. When you buy a property, you become responsible for handling all of the maintenance and repairs that may be needed for the property. On the other hand, when you purchase a property, you have more flexibility in how you choose to renovate and decorate the space. In this way, purchasing a property allows you to more effectively create a space that reflects your personality and needs.
Your plans, both short-term and long-term, will determine whether or not now is a good time to buy a home. If you do not anticipate remaining in the area for the next several years, it may not make financial sense to purchase a property only to resell it again so soon. Additionally, it is easier to move out of a rented home than owned property. If you anticipate remaining in the home for five years or more, buying the property and building equity is certainly going to be a better financial choice.
Of course, you should also consider the housing market when determining whether or not now is the right time to buy. If your intended market is on a downswing, you might want to wait until values bottom out before you make a purchase. Otherwise, you are likely to lose money on your investment. On the other hand, if values are on the upswing, it is better to purchase sooner rather than later. Otherwise, you may find yourself paying tens of thousands of dollars more for the same property. In short, setting yourself up to optimize your equity is one of the smartest things you can do when you decide when to transition from renting to buying.
This is usually the first thing that people think about, but it goes beyond the amount of money in your wallet and the number on your credit report. Some things to think about are the stability of your employment, existing debt, and upcoming financial commitments. Are you in a good position to buy? Generally speaking, you will find that it is cheaper to buy a house than it is to rent. Also, when buying a house, the money you pay each month toward your mortgage helps to build equity. When you rent, the money you pay each month goes toward helping an investor rather than yourself.
Your Commitment to the Area
Purchasing a home signifies making a greater commitment to the neighborhood than renting. Each neighborhood and community has its own personality and distinct characteristics. We recommend you determine if you are genuinely ready to live in the neighborhood for the next several years before purchasing. To that end, it may be wise to rent in the neighborhood for a few years before making a purchase. This way, you will have a much better idea if the neighborhood is right for you.
If you are ready to move from renting to homeownership there is no reason to put off making the purchase today! We are available to help you make that transition.