Buying Vs. Renting Home – 4 Ways To Make Smart Financial Decisions

Many people are torn about the best route when buying a home or deciding whether to rent. While there are some valid arguments for either side, deciding which option is appropriate for you can be challenging. So when it comes to making this decision, how can you decide on the right approach?

You must consider a few factors before setting a budget (income and expenses) and address other vital considerations (location and risk). With proper planning and some brief information, you’ll have greater insight into your life preserver in a financial emergency such as unemployment or an unexpected tragedy.

• Are You Planning to Settle Down?

The above question is one of the most important before starting this venture. If you’re looking to buy a home, you should plan. Renting is more intelligent if you’re planning to settle down in a different location.

A quickly growing city, especially in suburbs and metropolitan areas, such as Los Angeles, will be more costly for you to buy and maintain because of the increase in the property price of housing. This results from an influx in population and job opportunities at workplaces.

• Buying House As An Investment

Let’s say you’re planning to settle down. Buying a house is a smart move if you’re looking to invest. Soon, when you decide to sell your property, its value will increase due to the increase in population and jobs in these areas.

Another justification for buying a home is that the average household rents for around 30 years. If you are still in two minds about buying a house, then you can take help from Harding Financial Group to make intelligent decisions.

• Buying As A Home

The whole idea of buying a home is that it’s also your home. This means that location is also something else to consider before making this long-term decision. Be sure that your location is easily accessible from food establishments, malls and public transport, or even hospitals in emergencies.

Most importantly, consider what you can afford. You can go through a credit check and find out that some banks or lenders allow you to borrow more than the market value of your home. In this case, you should re-evaluate your options. While it’s okay to purchase a home worth $1 million, it’s better to start small and then grow as you can afford to do so.

• Renting House to Save Money

If you’re not looking to settle down in one location, renting a house is the best option. This can help you save money because your rental payments are around 30% of your monthly income. Using this guideline, you should be able to save more money and invest in other things.

Another important factor is risk management. For example, if you’re planning on moving around, owning a home can put you at significant risk since if you have to vacate the property at short notice, this can cost a lot of money in penalties or force you to sell it at a low price.

Final Words

There are many other factors to consider when deciding if you should buy or rent a house. However, most first time home buyers need to pay more attention to some of the most important ones. So once you’ve correctly assessed your options and planned accordingly, it’s time to take the leap and purchase your home.