Should you rent or buy a home? This is pretty much the first question you need to answer when it comes to housing. Everything else comes after you’ve decided on one or the other.
Know that the cost of buying a home is MUCH greater than the asking price. You’ll have closing costs, mortgage insurance, property taxes, legal fees, interest, property upkeep expenses, and more. Some of these costs can be difficult to plan for. Are you ready and willing to take on the financial risks and responsibilities of being a homeowner?
Comparing rent costs versus mortgage costs is not comparing apples to apples. A mortgage payment comprises a payment toward the balance of your loan and an interest payment. So, really, the comparison is between the amount you pay in interest and the amount you pay to a landlord. Neither of these payments will end up in your assets. Beware, however, that throughout the lifespan of a typical large mortgage, the amount of interest paid still exceeds the amount you would pay in rent for a similar home.
The single major benefit to home ownership over renting is equity. Though increased equity is certainly no guarantee, this leads many people to choose buying over renting on its potential merit alone.
Financial guru Suze Ormond says unequivocally that anyone with credit card debt and without 10-20% saved for a down payment is NOT ready to buy a home.
At the end of the day, there is no one right answer to the question of whether to rent or buy. The situation is different for every individual or couple, and factors will continually change.