To rent or to buy a house? At some point, almost every adult asks themselves that question. The American Dream is often synonymous with owning a home. However, the ever-changing housing market often makes buying a house challenging. Before deciding to rent or to buy, here are some things to consider:
House Rental. With HGTV and other home shows on television, our culture pressures Americans to automatically consider buying a house. That is not always a case, though, renting can be an ideal choice in certain circumstances, here are just a few:
- You have student or consumer debt. Debt is an ongoing burden. Clean your buying slate by eliminating the debt first. Continue to rent in the meantime.
- Your job requires transferring. Many large companies have rotational programs or advancement opportunities that may require you to move around. To make it worth your investment, most regions require living in that area for at least two to three years.
- You need planning time. Like any relationship, the commitment of buying a house should be carefully considered. This is not the time to act impulsively, even if you have the down payment handy. Relatives and friends may pressure you to buy, but do not feel guilty about renting until you have a plan in place.
Buying a House. While there is nothing like owning your own house and the pride that comes with it, there are many things to consider when deciding if you are ready to buy. If you think you are ready to buy a house, consider the following:
- Are you debt-free? It is difficult for a bank to authorize a mortgage if you are carrying huge student debt or consumer credit card debt. You do not want additional debt with the burden of a mortgage.
- Do you have an emergency fund? If you lost your job today, you need to pay your mortgage and your bills for at least three months while you look for a new job.
- Do you have a 10-20% down payment? If you have the ideal 20% down, that means you will not have to pay the PMI, the private mortgage insurance. A PMI protects your lender from going bankrupt if your circumstances stop you from paying the mortgage. Consider these handy finance tools.
- Your mortgage payment will be 25% or less of your monthly take-home income. You know you can make the mortgage payment now, but what if the unexpected comes up and you are forced to spend more per month on something else. You will need plenty of wiggle room in your budget to achieve other goals, such as saving for retirement and saving for your children’s college funds.
If you’re looking for expert advice on whether you should buy or rent a home, Starved Rock Realty has over 25+ years of real estate experience and can provide you the support you’re looking for. To learn how Starved Rock Realty can help you buying or selling a home, contact one of our agents today or call us at 815-667-9990.