Should You Buy or Rent?

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Posted on 10/28/2008

For most of us, a home is the most expensive purchase we will ever make. But is buying a home a good idea? Or should you rent? Here are some factors to consider when deciding between buying a home or renting one.

Find Out What you Can Afford
Wondering whether to rent or buy? First of all find out how much house you can afford. Use this easy calculator from Bankrate.com to find out what your price range might be. Compare your results with the housing prices in your area to find out what type of house you could afford. Is it in the location you want? Is it the size you were hoping for? If not, try renting longer until either your income or the market changes. Another great tool is this real estate worksheet from SmartMoney.com. It will tell you how much you could be saving each month (or losing) by buying your own home.

Compare Rent Prices
Are homes and apartments renting for far more than the cost of a mortgage might be? Compare rents in your area at Rentometer.com. Plug in your zip code, number of bedrooms and the rent you are paying to find out how you rank among similar renters in your area. You’ll know if you’re getting a good deal or not.

Evaluate your Savings
When the toilet leaks or the hot water heater goes out, who are you going to call? If you’re renting you’ll speed dial your landlord, but if you are the owner, there’s no one to come to the rescue. When considering whether to buy take a look at your savings. Could you swing a new fridge if needed or afford to patch the roof?

Consider the Community
Are you new to town? You might want to hold off on buying. It’s good to have a firm grasp on the community before committing to a mortgage. Find out which neighborhoods are best for resale. Check out crime rates, flooding history and school districts.

Determine your Job Stability
The only thing shakier than the economy seems to be my elderly, blind miniature pinscher. Be honest with yourself and determine your job stability. Is there any possibility you could be handed a pink slip any time soon? Then a mortgage may not be what you need on your plate. But if you feel confident then start searching for a good deal.

By Alison Storm

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