The “Rent or Buy” Quandry

The question, “Is it better to buy or to rent?” is on so many minds these days. And it’s understandable, with historically low interest rates and reduced home prices. Yet, there is no canned answer to this question, because there are too many angles which need to be examined to arrive at an accurate answer. The “rent vs buy” discussion is highly personal– there is no one view that “fits most” in today’s housing and employment market.

If this question is one you have been pondering, there are resources to help you arrive at an answer. A good place to start is with an interactive buy or rent calculator, like this one published in the New York Times. You can fill in your own personal information to produce a graph which examines your circumstances and analyzes what might be a better option for you.

Freddie Mac has a web page that discusses “Is Buying or Renting Right For You?” This web page offers bullet points to examine. Do you plan to stay in one place longer than 4 years, have good credit, reliable income, the ability to put down 5+% down and pay closing costs? Perhaps purchasing a home makes more sense for you. Does your career require frequent or sudden moves, you don’t want to deal with home maintenance/improvements, or your finances have experienced a setback? Maybe renting would be a better choice for now. Zillow also examines Owning Vs Renting a Home. Part of the Zillow discussion centers on tax deductions for home owners and the building of equity, both note-worthy issues to consider.

Are you just starting to explore the “rent or buy” question? Keeping track of your expenses and creating a monthly budget is always important; if you are considering a home purchase, it is imperative. Freddie Mac offers a monthly budget worksheet to help with this process. The Women’s Institute for Financial Education (WIFE) offers a Rent Vs Buy Worksheet, so you can examine personally your financial and tax consequences connected to each housing option.

It’s also a good idea to examine your local housing market. A real estate broker would be happy to speak with you. If you have examined the current monthly lease prices in your market area, and compared it to how much of a mortgage you could afford, have you also looked at what kind of home is available at your price point? Is it fairly easy to secure a rental home? A broker will be able to help you find answers to these questions. Also, a broker is a terrific resource for connecting with reputable mortgage professionals, if you would like to discuss the mortgage lending process.

To quote a title of an article written by Knight Kiplinger, A House Is Just A Home. Whether you rent or buy, the end result is you will have someplace to call home. What is important is to make the decision to rent or buy based on sound financial data, in conjunction with how the final decision fits with your current life circumstances and emotions.

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