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Have you been asking yourself the question -- should I rent or buy a house? Lots of people are trying to decide whether they should buy or rent home.
Many people want to buy a home, because they feel they might miss out if there is a boom in real estate prices. At the same time they are also worried about the possibility of a drop in real estate values.
Usually real estate prices and rents move up or down together, but in recent years home prices have been rising much faster than rental values.
Presently there is a wide gap between the two, due to which you may actually save money in the short term by opting to rent property, rather than to buy a house.
You can use a mortgage calculator to compare the two options. You also need to consider two important factors to decide about whether to rent or buy a house --how long you expect to stay, and how much you expect the property to appreciate.
To be on the safe side, assume that your home will appreciate at the prevailing inflation rate. Normally you would have to stay in the home for 3 to 5 years, to break even.
However, if you buy expensive property in one of the major metropolitan areas, it may take you more than 10 years to break even.
To be affordable, your monthly house payment should not exceed one third of your monthly income. The down payment is usually about 20% of the cost of the home. Closing costs can add up to 6% to the cost of the home.
You can get another loan to cover these expenses, but it will add to your overall cost.
Consider all these facts, and then decide about whether to rent or buy a house. Don’t let anyone push you into buying a home that you really can’t afford!
To get free quotes from reputed mortgage companies, please fill out our short form. There is no expense or obligation involved, and your contact details will never be given to anyone without your permission.
Please fell free to email us if you need any advice about buying a house. Our experienced counselors will help you to find the best solutions!
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