Rent vs Buy BasicsFinding Better Quality Questions

For the potential first time buyer there is always the pressure of making a committed decision to buy a home or not: Would it pay to hold off on buying and rent? This has an obvious short answer: It depends on your situation and the local housing market.

As a statement that answer does not hold very much information of value at all, the question deserves an answer that breaks it down into economic, personal financial and lifestyle choices.

The Local Real Estate Market And You

In the long-term owning tends to be less expensive than renting. But first time homebuyers should be concerned with the possibility of real estate price bubbles and overpaying because of property market hysteria. The problem with that is nobody recognizes this sort of bubble market until after it has burst.

If prices are racing upward and it is actually cheaper to rent then it may be better to continue renting. Taken in this way, it may be the simplest situation to analyze because you just need to determine rents versus the monthly cost of owning.

Your Personal Finances And You

If you are considering homeownership and you can determine that it is cheaper to buy your home you will need to determine your personal budget and your credit situation. When you look at what you spend in a month it may surprise you what costs are frivolous and could be reduced. Ask yourself the following questions:

  • Do I need a cell phone and a home telephone?
  • Do I need a premium cable package?
  • How much do I spend on vacations?
  • How much do I spend on eating out?
  • Could my family survive with one car instead of two? How about switching to public transport?

As brutal as these questions sound, they could be the difference between owning your own home renting from to landlord for the rest of your life.

If you have been getting by without careful budgeting then very often you will find that a detailed review and a newfound financial discipline will free up cash to save up for a deposit or pay down debts every month.

Have you reviewed your three credit reports in the last year? Find out what you credit status is, both in terms of your FICO Score and the reported items in your reports from all three agencies.

Your Core Values And You

When it comes to values and lifestyle choices, it is a matter of how settled you are at the present. If you are renting you can give one month’s notice and leave to travel or just change your surroundings when it suits you.

As a property owner, subject to loans, insurance and taxes, you will find that moving either requires listing and selling your home, with all of the stress and cost involved or becoming landlord, either making the effort to manage it yourself or trusting an agency to manage your home on your behalf.

However if you are seeking stability, you have found the community and home that you wish to live in for an extended length of time, ownership will likely be much more appealing. Real estate is expensive to dispose of because of the high financing and closing costs for both buyers and sellers at the point of sale.

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