Making The Decision To Rent Or Buy

by News Guy on November 25, 2012

(Guest Post by Williams)

One of the hardest decisions to make is whether to rent or buy your place to live.  Whether you are relocating or looking for your first place after living with your parents, the decision whether you should rent a home or buy a home should not be taken lightly.  As the real estate rules of the past do not reflect the current housing situation, deciding whether to rent or buy a home in today’s market has become complicated.

Here are some things that you should keep in mind when making your decision.

The Neighborhood

Many people that move to a new area choose to rent for at least a few years to test out the neighborhood before deciding to live there permanently.  Renting first in a new neighborhood allows you to find out whether a community has the amenities that you desire and helps you decide what side of town you would like to live on.  Many people find that their first home in a new city is not in the neighborhood that they eventually decide to settle down in.

The Cost

Renting is often much cheaper than buying and is easier to accomplish than getting approved for a loan to buy a home.  However, for many people it makes more sense from a financial standpoint to purchase a home to develop equity and increase their net worth.  It is important to remember that appreciation is a possibility, not a guarantee, and that your home is a shelter, not an investment.  You must also consider the additional costs of owning your home, like house insurance and routine maintenance, which can add a considerable amount of money to the expense of homeownership.

Your Future Plans

Planning is everything when it comes to buying a home.  If you are planning on living in the area for a long period of time, perhaps raising your kids in the town, then it makes sense to buy your home and gain equity while you are living there.  However, if you are planning to move within a few years, you might not want to incur the costs of buying a home.  The old rule of thumb was that you should rent if you will be in the area for less than five years and you should buy if you will live in the town for longer than that, but the current housing situation across the country has up-ended that rule so that it no longer applies in every case.

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