Rent or buy… that is the question

Perhaps you are renting, but have been thinking you would like to buy a home instead.

There are many reasons to buy a home, as well as reasons to wait. It is a very emotional process for yourself and your family. You will want to strongly consider which makes more sense for you. Then you need to figure out how much you can actually afford when it comes to buying a house.

If you are considering buying a house as a way to invest your money, a safer bet would be to turn to investments instead. They typically have a better return with less maintenance. Even with a tax break on your home, investments will grow more quickly and have a better return. You will build equity over time with a home, so if you plan on being in the home for awhile, then buying a home may not be a bad idea.

However, keep in mind that when owning a home, all problems are yours to take care of and maintain. This can be costly if you are not prepared for the problems. Also, keep in mind your job stability, if you think for any reason you may be laid off or lose work, you may want to hold off on a home purchase. In addition to the monthly payments, there are the closing costs, fees, mortgage insurance and agent fees. All these costs add up quickly. One alternative is a lease to buy option, that allows the buyer to rent and if they decide to purchase, some of their rental fees go toward the down payment.

Rent or buy a home - Seller Financing Loan

You may want to consider a seller financing loan. This is when the owner of the home agrees to help with the down payment. So, if the person wanting to buy the home is short with their down payment, a second loan is taken out by the original owner of the home and the new owner will make a payment on the home loan to the bank and a second payment would go to the original owner’s loan. Or the seller and buyer can work out an agreement, where the buyer pays the down payment directly to the owner and makes all payments directly to the owner after giving them the down payment.

Interesting side note, the NY Times had an interesting piece on the rent or buy question.