Factors to consider when deciding whether to buy or rent a house – words Al Woods
Buying and renting is a cycle. When we have just started life or employment, we tend to rent houses as we continue with life. As life moves on, we save money and research into home ownership plans which enables us to buy and own homes.
As we get older towards retirement, some will end up selling their retirement homes to become renters once again. The main factor to consider when deciding whether to rent or buy a house is cost. The following are some costs that go into both the rentals and homes.
Costs for buying and owning your home
It’s essential for you to do thorough research that will give you detailed financial information. At investors hangout, you will find financial information that will enable you to make informed decisions when deciding whether to rent or buy a house. Some costs that one is likely to incur when buying a home include upfront and closing costs. Upfront costs are paid at the beginning of the negotiations and may be paid out of the pocket.
One can also pay the earnest money which is used to prove to the seller that you are indeed serious about purchasing the house. This may range between 1% and 3% of the purchase price. One should also pay the down payment normally at the closing.
A home appraisal is also important for ascertaining if the offer price is consistent with the actual value of the home. One should also secure the services of a home inspector to find out if the house has any problems. Recurring costs are also key when evaluating the costs of buying a house. These may include loan repayments, property taxes, homeowner’s insurance, private mortgage insurance, utilities and maintenance costs.
Lastly, one-time costs should be considered since they involve furnishing, moving expenses and repairs.
Costs of renting a home
Renting a home luckily does not involve any expensive costs such as the purchase costs. The only upfront costs that a renter may experience is the security deposit to ensure against any damage which may require fixing and repairs. First-month rent is also key to secure the house. Some even require a non-refundable deposit depending on the housing laws. Moving costs will also be expected for moving your belongings to the new rented house.
Others costs incurred include the recurring expenses such as the monthly rent. This rent may be constant or may fluctuate depending on the current financial condition of the region or country. If you intend on having a pet, some landlords require the tenant to pay pet rent. Utility costs such as cable and internet will also be included in the rent.
It is important for one to closely evaluate the costs that are associated for one to assess the costs that are associated with both options closely. If owning a home cannot be sustained by your monthly income, you should shy away from owning it until you can afford it.