We’re taught from a young age that home ownership is an integral part of the American dream and that buying a house is a rite of passage in adulthood. That doesn’t mean that home ownership is the right choice for everyone. When you’re deciding to buy or to rent you need to make an educated decision rather than basing the decision on your emotions. There are lots of advantages to owning a home so let’s look at whether buying or renting is right for you.
Why Do You Want to Own a Home?
There are a lot of practical reasons to owning your own home, it can be cheaper than renting and you are not paying someone else’s mortgage or lining their pockets. In most cases it’s a good investment that will grow in value. If you have a family or want to start one it gives you the space you need. Home ownership comes with responsibilities, you will have to take care of maintenance and repairs, and there is no landlord to call. You want to buy because you feel home ownership is the right choice for you and not to keep up with your peers who are buying houses.
Can You Afford to Own a Home?
Very few if any buy their first home cash, today homes are bought with mortgages. In order to buy a house this way you need to qualify for a mortgage and that means sitting down and scrutinizing your financial situation along with the market. In some communities buying is cheaper than renting, you would pay less every month on your mortgage than you would rent on an average two bedroom apartment. In other communities like San Francisco or New York you need to be earning six figures a year to afford a home way out in the suburbs.
Talk to a mortgage broker to see what you qualify for, what you will need for a down payment. You may have to do some work to improve your credit score or start saving towards a down payment, but you will at least know where you stand financially.
Why would someone choose to rent rather than buy? There are plenty of people who don’t want the responsibility or their career means a great deal of travel where home ownership is just impractical at this point. Living in a city with a high cost of living can put owning a home out of reach. Ultimately you have to decide which is the best choice for your situation.