While making the decision of either renting or buying a place to live, there are two categories of factors that must be chewed upon. The first category represents financial aspects of all your decisions and the second category shows up a set of emotional and personal factors, which are more kind of intangible but also play an important role in the decisions of renting or buying. Letâ€™s focus at the financial factors in this article, which includes the initial and ongoing costs as well as the cons of owning your home and long-term pros.
The first step in any decision-making process is to specify whether or not you can afford a home you are checking out. Issues include your ability to make a down payment usually between 4% and 20% of the home’s purchase price and the pay closing costs which may be an additional 5%. These costs exceeds sometimes the initial payment and security deposit that is required if you are renting instead of buying a house. So having enough money to get on the initial purchase of a new home is just the half of the battle.
Before moving into your home, you’ll also need to put some thoughts like how much it’s going to cost for you to stay there after you have taken up the residence. As many financial experts suggest that your monthly loan amount payment should not exceed 28% of your total monthly income and also that your total monthly debt payments should not exceed 36% of your totally monthly income. If you get beyond any of these limits, you may get into trouble because, in addition to paying the loan amount each month, you will have to factor in home maintenance also. From all minor things like carpet to window coverings, any new appliances to a complete new roof, everything would cost money and remember that nothing lasts forever.
So in that case Renting may be a little easier on the pocketbook because it provides a fixed amount of cost for monthly expenditures, which can be paid simply with the rent. And besides perhaps increasing from year to year, the rent would remain steady, if any maintenance issues arise, the landlord would pay for all the repairs.
But incase you’ve done all the math work and can afford to make the initial purchase and all the services of the ongoing debts, then the next factor you will have to decide is whether this purchase will benefit you financially or not.
Proponents of buying usually cite the ability to build total equity, the investment value and the tax breaks of a home as solid reasons to buy a home instead of rent. All these arguments thus have merit as well as there are downsides to all of them.
You can decide yourself now and perform all the calculations by yourself on either of the ways you like; there are a variety of online calculators which are available to help you evaluate the financial aspects.