If you are planning to be a first time homebuyer, one of the most important things to consider is if it’s smarter to buy a home rather than renting one. This actually depends on the situation you are in. If you are living in a place where the inventory of homes is low, down payment requirements are high and the prices of real estate are above an average, you must think wisely before you make a move.
There are some questions you need to answer before you decide to buy or rent a home.
How long am I going to stay?
This is the first question you need to answer. Finding if a home is affordable for you or not depends on how long you plan to keep the property. For example if you are looking for a house in Washington, where average house price is $698K and rental price is $2.5K, if you are not going to keep the property for more than two years, renting the home might be a better option for you.
Am I aware of all the costs?
Many people make this mistake. They don’t know the real costs of owning a home. There are actually so many hidden costs associated with each. However for renters, there are many things they do not have to pay for. Here are the hidden costs you have to pay for if you own a home:
- Homeowner’s insurance
- Private mortgage insurance
- Property taxes
Am I throwing money away?
Many people might say that renting is the best way to throw money away. However on a month-to-month basis, owning a home is still more expensive in all 50 states, according to a 2017 NerdWallet analysis, and an inflated budget can seriously impact your ability to save for retirement.