Deciding whether you want to venture into homeownership or keep renting can be a difficult decision. Each situation offers its own benefits and drawbacks. Which option is best for you? Answer these nine questions to determine if you should rent or own.
- How Steady Is Your Job?
If you’re settled into a good job that is stable, buying a home is a great way to increase your financial security and start building wealth via equity. However, if your job is spotty or the company you work for is in trouble, it may be best to hold off on signing on for a mortgage just yet.
- Are You Planning to Move in the Next Two Years?
Loving your city or town and planning to stay there for the foreseeable future? Put down roots by buying a home. Not crazy about your city, or expecting your company to relocate you in a few months? Renting keeps you mobile and able to move without worrying about selling your property.
- How’s Your Credit Score?
Your ability to qualify for a mortgage loan hinges on your credit score. Keep in mind, though, some bad credit loan programs can get you into a home even with less-than-perfect credit. If your credit score is fair, good, or excellent, you may be ready to take the homebuying plunge. However, if you’ve made some credit missteps and your score is low, it may be better to work on your financial picture for three to six months before tackling the purchasing process.
- What’s Your Debt Load?
Not owing much on your vehicle, student loans, and credit cards puts you on a smoother path to buying a house. High debt, while not impossible, makes qualifying for a loan and making monthly mortgage payments more challenging. If you have lots of debt, make an actionable plan for paying it down. This puts you on better ground to get the mortgage you want when you’re ready to buy.
- Do You Follow a Budget?
Sticking to a budget is smart whether you rent or own. However, it’s important to be able to follow a budget when you own a home to cover your monthly mortgage payment, insurance, taxes, and other expenses that homeownership brings. Make a realistic budget — and stick to it.
- Is Renting Restrictive to You?
Are you longing to paint your walls or have a pet? Then you’ll love owning your own home. If you’re feeling stifled in your rented space, it may be time to move toward purchasing property of your own. (Just remember that you must still abide by community rules when you buy a home in a deed-restricted community.)
- Would You Like More Tax Deductions?
Homeownership can give you thousands of dollars in tax deductions from the mortgage interest to the property taxes. If you’re renting and your income taxes are killing you, it may be time to buy a place where you can benefit from the tax advantages of being a homeowner.
- Are You Ready to Handle Your Own Repairs?
Do you appreciate being able to call your landlord to fix your leaky toilet and broken garbage disposal? If you abhor handling these tasks yourself or paying a repair person, renting may be your best choice. However, if you view dealing with this type of stuff as just another day and a mild annoyance, you may be ready to own a home.
- Are You Craving Things Renting Doesn’t Give You?
It’s hard to fight the allure of owning your own home. Does a big yard with an expansive porch compel you? Are you yearning to plant and care for trees and flowers in a gorgeous front yard? Do you want the benefit of a roomy garage, a woodworking shed, or a huge walk-in closet? Owning a home gives you free rein to create your own space and enjoy your hobbies and life exactly as you want.
Buying a home is a big decision that shouldn’t be reached lightly. By weighing a combination of factors including your finances, income taxes, personal goals and preferences, your work situation, and short and long-term goals, you can choose the best path for you.