Unsure whether you should rent or buy a new home? Well, then you’ve come to the right place.
Owning a home is a dream for many people, but renting is also a great option under the right circumstances. And while money is definitely a factor, there’s a lot more to consider than just the size of your wallet. Hint: it’s about finding the right fit for you at this time!
Keep reading to learn whether you should rent or buy a house.
1. Length of Stay
The length of your stay really depends on your lifestyle choice.
If you’re a bit of a nomad or have to move around for work, renting allows you to relocate with ease. But if you’re looking to put down your roots in one place, buying a house makes more sense.
To put it simply, 2 to 4 years is better for renting, and 5+ years is better for buying.
If you’re not at a point in your life where you can afford to buy a house, don’t force it. Renting is a great option for people paying off debt, rebuilding their credit score, or still making life plans.
However, if you do have the means to buy a home, consider all the expenses before you make a decision. There will be the downpayment cost, closing costs, renovation costs, and moving costs.
If you think buying is the best option for you, check out some additional information on loan requirements.
When you buy a house, you’re building equity with every payment you make. It can be a great way to build your wealth over time, as it takes many years to accrue this money. The drawback is that equity cannot be guaranteed, however smart you may be with personal finance.
When you rent, you don’t have the opportunity to build any equity. And if building equity is important to you, renting might not be the right choice.
4. Tax Benefits
When you’re renting, you don’t qualify for many tax deductions.
But when you buy, there are some tax deductions that you can take advantage of. For example, there can be deductions for mortgage interest, mortgage points, some home improvements, property taxes, and capital gains tax.
5. Risk Factors
Both renting and buying come with a few risk factors, so you have to consider which risks you’re willing to take.
If you rent, your rent may go up over time, your landlord could stop renting, and you won’t be able to do much renovation. If you buy, your home value could decrease, and you’re responsible for any unexpected maintenance costs.
Are You Going to Rent or Buy a House?
While this is never an easy decision to make, you have to do what’s right for you. And whether you rent or buy a house, you’ll have a wonderful new home at the end of the day. Just make sure it works with your lifestyle choices, budget, investment goals, and willingness to take risks.
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