One of the most critical decisions people face in today’s residential real estate market is whether they should buy their first home or continue renting. And while buying a home is a dream for many, it may not be the best option in every situation. Today we’re discussing three points every potential homebuyer should consider before settling on their decision.
Review Your Financial Situation
Arguably the most consequential factor of deciding whether you want to rent or buy is knowing your budget. A few aspects you should consider when looking at your financial situation is looking at your income, what you have saved for a down payment, your credit score and any debts you may have (like student loans or outstanding credit card payments). After confirming your financial security, consult whether those conditions put you in a comfortable position to consider purchasing..
Another point you might also consider is whether renting or buying offers the better financial value in the geographic area where you are looking. Just because homes will build equity over time doesn’t necessarily mean it is a better option to buy rather than rent. If rent is low relative to purchase prices in the area, it might be a better option to rent.
Picture Where You See Yourself In A Few Years
Before you decide whether to buy or rent, ask yourself where you see yourself in 1, 5, or even 10 years down the road. If you can’t picture yourself in the same space for at least 3 to 5 years, it probably makes more sense to rent. However, if you see yourself settling in for the long haul, buying is the logical route for you.
Because of the one-time expenses and fees that come with buying, the longer you can stay in one home, the less you’ll have to spend on those costs, and the more potential your home has to increase in value.
Go With Your Gut
When all else fails, go with your gut. Purchasing a home involves far more than just financial transitions. It’s a source of stability, independence and gratification for many. The decision you make is one you want to feel content about in the future. Before you make your final decision, ask yourself if you’re in a position to experience some of the commitment and lifestyle changes that come with owning a home.
While both buying and renting comes with their own benefits, it’s imperative to make sure you know which choice is more beneficial to you. To explore more of the benefits of buying vs. renting, check out Fidelity’s full analysis.