In the previous article, we discussed how to improve your credit score. Before you run to the bank to obtain a mortgage, you should evaluate if buying is actually the best option for you. For some, renting may be a better fit, due to their financial situation and lifestyle preference. Although there’s no one correct answer or magic formula to decide for you, in this article we’ll consider some of the major factors to help you make the best decision.
The first major factor to consider is how much savings you have available. Even with a mortgage, the up-front costs of buying a house can be substantial (see Costs of Buying a Home for more information). Even after you’ve purchased a home, you should always have an emergency fund and expect the unexpected. Problems like a broken furnace or leaky roof can occur at the most inconvenient times. If you cannot set aside money equivalent to at least 3-6 months of living expenses, you should strongly consider waiting to purchase a home. Because the landlord is responsible, renters don’t have to worry about these types of emergencies.
The second major factor is how much time and money you can devote toward regular maintenance. Projects like cleaning windows, trimming the trees, and repairing a leaky faucet are necessary to maintain the health of a home. If you are looking to buy, be prepared to invest both time and money into regular maintenance. And if you aren’t willing to do these tasks yourself, you will need to pay even more to hire a professional. Again, renters typically don’t need to worry about this type of maintenance.
The third major factor to consider is how long you want to stay. Generally, the longer you are willing to stay in one place, the smarter it is to buy a home. If you want the flexibility to pick up and move in the next year or two, renting is probably a better choice.
The fourth factor to consider is the condition of the real estate market in the area. From a financial perspective, it’s much more attractive to buy a home in an area where prices are rising and lots of people are looking to buy. Otherwise, several years down the road, you may find yourself selling your home for a loss. Or worse, you may not be able to sell at all! If market conditions look promising in the area, buying can be a great investment. If not, it may be safer to rent.
There are other factors to consider in the decision as well. Owning your own home offers much more room for creative projects and modifications. If you have unpredictable income or anticipate a career change, renting offers more stability and may be a safer choice. Ultimately, the decision is up to you.
If you are interested in hiring a professional realtor who can guide you through this process, Donna Gundle-Krieg loves working with people and would be happy to provide you with more information. She has many exciting listings available in great Antrim County locations, which you can view here. You can contact her at (231) 350-8507 or dokrieg@gmail.com to learn more.