Renting a home and buying a home each have its own advantages compared to the other. When deciding between these two options, it is important to consider your current situation in order to come up with the appropriate choice.
One advantage of renting a home would be that you can put your money to other investments such as your retirement fund, stocks, or business. Renting also gives you the flexibility of moving to another place whenever you want to.
One thing to consider would be the status of your job. Can you guarantee that you can keep your job for the next 20 years or more? If you’ve just started working with a new company, you may have to wait a little longer to make sure that your job is stable enough to support your mortgage. Many people ended up in foreclosure because they never anticipated the possibility of getting fired or getting laid off from their job.
Relocation is another important factor to consider. Are you sure that you’ll be staying in the same city for the next five years or beyond? Is there a possibility that you might be transferred to another location because of your job? Obviously, renting a home would be a more sensible choice for you if you’re not sure about such questions.
For those who have really poor credit, this may not be the best time to make a home purchase. First of all, lenders will most likely give you high interest rate on your mortgage loan given the fact that you are a high-risk borrower. Also, you’re left with very little choice of lenders to go to and there are many lenders out there who take advantage of people with unsatisfactory credit history. If this is the case, a much better move would be to work on your credit rating first before applying for a home loan.
Hence, given these matters of consideration, you need to weigh the possibilities and your present situation before attempting to make a home purchase.
When Purchasing a Home is the Better Choice
Purchasing a home is a great investment because a home property’s value increases over the years. The amount of purchase you’ve paid for your home today can double or even grow three times higher in the next 10 years. As we’ve said earlier, if you an excellent credit score to back you up, you’ll definitely have more options on your home loan. Being a low-risk borrower, lenders will be willing to give you lower rates on your mortgage.
If you can get a mortgage loan with a low fixed interest rate, you can save more of your finances if you purchase a home instead of renting. Calculate the cost of your monthly mortgage together with the additional expenses with purchasing a home. Compare this with the amount of rent you’ll spend for the same number of years. This way, you can see the difference of buying a home versus renting a home.
However, remember that you can only be successful in a buying home if you can pay off your mortgage until the end of your payment term and obtain complete ownership of the home. Thus, it is crucial that you choose a mortgage loan with payment terms that you can afford for the entire loan period.