Deciding whether to rent or buy a home is a decision that nearly every family must face one or more times in their lifetime. While the deciding factors may be purely personal, such as choosing to purchase because you want to settle down in a certain area or neighborhood or choosing to rent because you know you will have to move again in the near future, there are some real financial benefits for both buying and renting that you may want to know before making your final decision.
Top three financial reasons to buy instead of rent
For most families, buying a home can make the most financial sense when the following circumstances apply:
- real estate prices represent a good value for the buyer, with indications that the home will hold its value well or even appreciate soon
- the buyers are in a good financial position with sufficient savings and income to make a substantial down payment on the home they want to buy, as well as being able to comfortably cover the other costs associated with the purchase
- the buyers plan on living in the home for several years
Top three financial reasons to rent instead of buy
But even though buying a home can be an excellent financial decision in many cases, it is not always the right one. Here are three examples of situations when renting a home is a better financial decision than opting to purchase.
- when families know they will be moving again within a short time for employment or other reasons
- when the real estate market is peaking and home values are expected to fall
- when buying a home would place the family in a precarious financial situation, such as when total housing costs, including mortgage, insurance, and taxes would exceed 25 to 35 percent of family income, after taxes
Since the real estate market varies widely from area to area, there may be extenuating circumstances that can also help families to determine whether it is time to purchase or rent a house. To make the best possible decision for your family, take time to meet with a reputable real estate professional in the area in which you will be living to discuss your situation in detail. They can offer you the most current information on the local housing market and any trends that may influence your final decision on whether to rent or purchase. In addition, a real estate professional can help you view available homes on both the sales and rental market and assist you with all sales or leasing details.