Featured News 2013 Should I Rent or Buy a House?

Should I Rent or Buy a House?

Before the housing bubble burst, many people were eager to stop renting and to purchase a house as soon as possible. Of course, many people also came to the painful realization, perhaps at the point of foreclosure, that it is possible to buy a house too soon. When it comes to the decision of whether it is time to buy a house or not, only you can decide for yourself, and it is a big decision that requires a great deal of thought about your financial situation and your lifestyle.

One of the important things to remember is that the mortgage is not the only expense you have to meet. While a mortgage may be close to the same amount you are currently paying in rent, there is also homeowners' insurance (often $450 to $1,300 every year), property taxes, plus utility bills and repairs (totaling to 1 percent of the house's price every year in expenses). These will all take out a considerable chunk of your banking account. You will also need money for closing costs and the down payment.

Not only do you need to assess your income and your savings, but you need to take a good look at how financially organized you are. Is your checkbook balanced? Do you periodically forget to pay your credit card bills? Do you have a box of random, unsorted papers for your tax preparer to wade through in April? Before you can get an affordable mortgage, you will need a strong credit history. You can ask for a free copy of your credit report, going over it to make sure that everything is accurate. On top of building credit, you would need to also start saving up for the additional costs of home ownership, as mentioned above. You also need to have your financial documents in good order, and this would further help you with tax breaks should you become a homeowner.

You have to be aware of your financial situation, and also the housing market where you are looking to buy. This means more than combing the newspaper. Find out the exact price that homes have already sold for (talking to a real estate agent could help). You can also visit the listed and sold houses to get an idea of the quality of homes that are on the market.

Even if all your finances check out, you also have to consider your lifestyle. You would have to stay in the one location for at least three to five years. You may also have to give up a good deal of your weekends for the necessary upkeep of your house, plus any improvements you want to make. One of the perks of renting, after all, is that you can just call your landlord up for things that have to get fixed. And then if you have plans to go back to school, or you are trying to get a job transfer, there is not much point in buying a house yet. Another reason to wait to buy could be your household expanding in size. This could mean a significant other, a baby, or even a pet, any increase adding to the strain of a house that was bought when the household was smaller. Unless you can buy a house that will be able to sustain such growth, renting can be the way to go.

Of course homeownership comes with a multitude of benefits. It is just important to realize that these benefits do not outweigh the benefits of renting in every case. Not everyone has to buy a house to live a successful life.

Finally, there are legal aspects to your current status as a homebuyer or tenant, and to any future steps you want to make in the real estate market. If you need to understand and protect your legal rights as a tenant or homebuyer, find a real estate lawyer today!

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