Becoming a home owner is indeed a fantastic achievement but as an adult, it is important to decide whether buying a home or renting one is in fact the ideal thing for YOU to do. Renting may sometimes mean smaller payments each month but the lack of return on your investment-and the limitations that can come with renting, can really take the joy out of this option. Let Globe Finance Inc. help you decide with some simple questions to include when you are thinking “Should I buy or rent?”
What is Our Budget?
For those with plans of owning their own home, accumulating savings towards this goal must start very early on. When considering buying vs. renting, you cannot simply compare a mortgage payment to a monthly rental amount-if you intend to buy, you will likely need to produce a deposit of around 5%-10% upfront and this does not include the legal fees, insurance or repair costs that will be added at signing, although due to the economy, it really is becoming a buyers’ market at present with a consistent drop in house prices. Opting to rent relinquishes the tenant of all of the foregoing which would be at your Landlord, however finding a reasonable monthly rental cost on a home that includes more than one utility, if any at all, proves very trying at times and the home will not be yours over time.
Can We Afford To Maintain Our Property?
Owning a home will also mean assuming all responsibility for its upkeep. Determine whether you can afford to purchase and maintain your home and property. Renting will hopefully include one, some or all of the utilities on the property, while being a home owner means you will have ground maintenance fees and monthly utility bills to consider-as well as furnishing, and possibly refurbishing it, during your lifetime. Don’t forget to factor in the payments of annual insurance and land tax. If you’re a renter, you stand to lose your deposit if there is a break in the lease, or if anything is deemed to be missing or damaged at the end of your tenancy.
Will My Credit Score Affect My Decision?
When applying for a mortgage, one of the major contributing factors is your credit score. If your score is on the lower end of the spectrum, you can plan on paying more in interest. Spread out over 30 years, this can really add up. If you have less than excellent credit, you may want to opt for a rental until you can rebuild your score.
Will I Mind Dealing With A Landlord?
When you own your home, you can basically do whatever you please with it — you can paint, refurbish, keep pets or add on to it for example, while renting restricts you to your landlord’s rules. They will likely set specific limitations about what you can do on, or to, the property; not to mention they can sometimes over step their boundaries or be difficult to get along with depending on who you rent from.
Are Our Careers Stable?
If your career is only now taking off with an entry level salary, or, requires that you move around frequently, then renting might be a better option for the time being. Should you lose your job, or fall behind on payments, your mortgage could end up in jeopardy from lack of payments and losing your investment through foreclosure five or ten years down the line will really unsettle you. Similarly, selling a home in the event that you have to relocate is not an easy process- it takes time and costs money-a rental on the other hand, can lend more flexibility, depending on your lease agreement. If you are facing any of these situations, look forward approximately 3-5 years and see where you are likely to be before deciding.