Deciding Whether to Buy or Rent a Home: Which is Right for You?

When it comes time to decide whether it is time to buy a home or continue renting, there are a few things that need to be considered. Some components of the decision rely completely on finances. However, there are some other things that should be taken into account before diving into one option or the other. One thing that should be left out of the equation, however, is emotions. Choosing to buy or rent a home based on emotions alone can be a big mistake. Instead, consider these other components to help you decide.

Knowing Your Finances

The biggest thing to examine before making a decision is whether or not you can even afford to purchase a home. This is likely the biggest purchase that people make throughout their entire lives which means it is important to take some time to make sure it is a good move financially.

The first component of this is determining if there is enough money in the bank to pay for a down payment. The down payment can be anywhere from 3.5 to 20 percent based on the type of loan as well as personal goals. The more that can be put toward the down payment, the less that will be owed on the home at the time of purchase. Even if you have enough for a down payment, this is only half the battle—whether you're in a community like Lakeview Heights or elsewhere. The next step is seeing if you can afford the monthly cost of a mortgage.

There is a common misconception that renting is more expensive than owning a home. This is not necessarily the case because there are several things to make note of and be aware of, such as repairs and insurance costs. It is important to determine how much home you can afford as well as how much it will cost to stay in the home and maintain it. If this seems like too much to handle, then buying may not be the best choice. However, if it still works with your plan, then it is time to move on to the next consideration.

Life Timing

If the finances make sense then it is time to examine if it is a good time in your life to buy. For some people, this is an easy decision but for others, it may not be so cut and dry. The first thing to consider is how long you plan on staying there. If you plan on moving again in 3 years, then buying may not be a good financial investment. However, if you do not have any plans to move, then it may be a good option.

Some things to consider include how much the city appeals to you, if you like your job and it is steady, and if you have no immediate plans to move. If signs point to you moving away from the area in the future, then it is best not to buy. However, if you have no plans to leave and your finances are in order, there should be nothing to stop you. Just be sure to ask the hard questions before taking the plunge.

Preferred Lifestyle

Your preferred lifestyle takes both finances and life timing into consideration but is also its own factor when deciding whether to buy or rent your next home. Purchasing property is a significant commitment – is this something you’re ready for? Are you prepared to spend your free time taking care of home improvements, maintenance, and the other responsibilities that come with homeownership? Or would you prefer a landlord to take care of these tasks so you can spend your free time travelling or doing other activities?

If the latter is more appealing, now is probably not the time to buy. However, if you enjoy projects, have the time to commit, and can handle a bit of risk tolerance and unpredictability in your monthly expenses, buying gives you the opportunity to build equity in your home and have a solid long-term investment. Homeownership also means no worries about a landlord raising your rent, ending your lease, or evicting you, but it also means you must make your payments, maintain insurance, and avoid foreclosure. Think about your preferred lifestyle and what types of unforeseen events you’re prepared to handle – both renting and buying come with a level of unexpected. 

There comes a point where everyone considers whether they should buy or continue to rent. The answer to that question is not the same for everyone which is why it is extremely important to examine things personally before deciding on one thing or the other.