There are many difficult decisions you’ll have to make when shopping for a home. Deciding whether to rent or buy is a particularly important one that needs to be made thoughtfully. Buying a home can seem like a major step to take, but that doesn’t mean renting is inherently better. The right choice for you depends on a number of factors. Read on to find out how to make the best decision for yourself and learn more information about home mortgage loans.
What Are Your Plans With This Home?
While deciding whether to rent or buy a home, you’ll want to be thinking carefully about your future. Many people do not take this into account and, as a result, end up making the wrong call.
To start, ask yourself how long you expect to live in this home. If you know you will move somewhere else in five years or less, renting could give you more flexibility.
On the other hand, buying is typically the better option if you are interested in a stable, permanent residence. If the comfort of consistent monthly payments that won’t increase over time is something you find important, you might be taking a risk with renting because your rent could increase at any time. Your landlord could even decide they no longer want to rent the place out, forcing you to move unexpectedly.
Obviously, there will always be circumstances you don’t see coming. Your future plans aren’t the only thing to take into consideration here, but it pays off to have a general idea of what your future looks like before making a major decision like this.
Can You Afford to Take Care of a House?
Thinking about your future doesn’t just mean deciding if you will or won’t move in the next few years or the cost of rent. Be thinking about what you want to do with the home itself. Do you want to customize a house and make renovations? Then renting would not be right for you.
But renovations can be very pricey. So you’ll need to make sure you can handle that financially. Even if you aren’t planning on major renovations, you’re responsible for the state of the house and property. If you need to do any maintenance, you’ll have to pay for it yourself. Same with home repairs. These can add up. When you rent, the landlord will likely pay for maintenance and general repairs.
How Does Your Financial Situation Play Into This Decision?
Make sure you are accurately aware of your financial state ahead of time. This includes being absolutely sure of how much you can afford. When you buy a home, you get a mortgage. You’ll also have to make a down payment, plus pay for closing and moving costs. Renting will often require a deposit, but it won’t have those same closing costs.
There are sometimes hidden expenses, so make sure to have extra funds just in case. In general, you should not be putting all the money you have into buying a home.
That being said, when you buy a home, you will have a fixed monthly payment. This means you’ll always know the exact amount so you can plan your budget accordingly. Meanwhile, as we mentioned above, your rent could change over time.
How Does Location Affect This Decision?
The cost of renting versus the cost of buying can depend on where you live. Just because it’s cheaper to rent in one area doesn’t mean the same will be true in your area. The cost of renting and buying can vary over time, both in your area and in general. Look for a rent/buy calculator to help you see the facts and figures.
How Does Renting or Buying Impact Your Financial Future?
Buying a home is a major purchase that can come with many financial benefits and pay off big in the long run. This is why knowing whether you’d prefer flexibility or stability is so important. If you buy a home and stay there for a while, you can build equity. When you rent, however, you will not build any equity.
Often, home values increase over time. That means when you do sell, you could make a nice profit. However, there’s the chance your home value will decrease instead, causing you to lose money. You need to weigh your options carefully.
Buying a home also might involve tax benefits. This is known as a mortgage-interest tax deduction. How much you can deduct depends on the date and amount of your mortgage. Your mortgage also needs to be secured debt—with your home as collateral. You can find out more on Forbes.
If You Decide to Buy, What’s Next? What About a Mortgage?
You may think you’re financially stable enough to make this major purchase, but there are others who will have to check off on that. For instance, a mortgage lender. Lenders will want to know you can cover emergency costs as well. This is why you shouldn’t put all of your money into this purchase.
Most people who buy a house end up taking out a home mortgage loan. Another decision you will have to make is where to get this loan from.
Getting a mortgage loan from a credit union has a number of great benefits. Since credit unions are smaller and member-focused, it’s easier to get a more personalized solution. You can also get the best deal on a home mortgage loan when you get it from a credit union. There will likely be lower fees and fewer fees overall, and credit unions typically have the best mortgage rates available.
At Solarity Credit Union, the process of getting a home mortgage loan is simple. Want to get an idea of what your monthly payment would be? Check out our website’s easy-to-use payment calculator or talk to one of our Home Loan Guides. You can even apply for a home loan easily, right from our website.
You can find more about Solarity and our home mortgage loans on our website. There are resources and information to help you in your specific situation. This is just one of the many ways we look out for all our members. Sign up to join us online today.