Whether you are moving out of your parents’ home for the first time, relocating to a new city, or just looking for a change, there is one important question you must ask yourself when you are looking for a new place to live – should you buy or rent? While this may seem like such a simple question at first, the answer can become quite complex and depends on several different circumstances. To help you make the best decision for your situation, following are a few details to consider.
How much do you have saved?
One of the initial draws to buying a house versus renting a property is that a mortgage payment can actually be lower than what you would pay for rent each month. However, you have to remember all the initial costs that are associated with buying a house. Typically, you will need to have some cash available for closing costs. Additionally, if any problems or issues arise once the sale is complete, you will be fully responsible for covering all the costs. For this reason, you should also have enough in your emergency fund to take care of any necessary maintenance or repairs. If you still need some time to build up your savings, renting for a few years could be the best option.
How long do you plan on living there?
Even if you are in the financial position to buy a house, you also have to seriously think about how long you plan on living there. Do you feel confident that you want to commit to one area for a few years? In order to avoid paying capital gains after you sell a property, you must live in the house for two years. Even if you just “think” that you love an area, it could be best to rent for a year or two just to be sure.
Are you ready to put in the work?
One of the biggest advantages to renting is that most of the work is done for you. You don’t have to worry about mowing the lawn, handling the repairs, or paying for new appliances when the ones you have stop working. On the other hand, buying a house comes with a tremendous amount of responsibility. If anything needs to be taken care of, it is your job to handle it or hire someone who can.
The decision to buy or rent can be a tricky one, so it is important to really think things through before making such a large commitment. However, buying a house can be an incredibly wise financial decision, so you need to take all factors into consideration.