Buying a home is one important step in anyone’s life. For some, this can be the first place they call home. For others, it’s an investment for the future. Key questions to answer when buying a home and looking out around house for sale, is “should I rent or buy?” Although the two options appear the same on paper, many factors are neglected during this decision-making process.
Let’s start with renting
Even if you do not have to deal with fixed expenses, such as mortgage payments and property taxes, all your money goes towards paying the monthly rent. Suppose that in a certain month you are having trouble paying your rent as a result of an emergency or other financial responsibility. In this case, you don’t have any choice but to borrow from family and friends, take a cash advance on your credit card, or even consider bankruptcy.
When you buy a house
All the money that used to go into rent is now going to pay off the mortgage on your home. This is an investment in itself and can pay off quickly if the house owner has high income and low expenses (which is very rare). So while people think that buying a home means investing in something that’s stable and reliable, it is crucial to remember that there are risks related to this sort of transaction. You can spend plenty of money on a venture that never turns a profit.
Buying a home can vary greatly by location and – a small condo in a city versus a large estate in the countryside. This means that your average middle-class family will all the time struggle to buy a house, while the rich can purchase whatever house they want.
When something goes wrong
One last thing to note is that home ownership is not guaranteed if you default on payments (which is usually the case). If you miss two mortgage payments in a row, the bank will send you a foreclosure notice, and if no agreement is made after 90 days, they can repossess your house and sell it at auction. The problem with this scenario is that banks generally offer low bids on homes, and again, only the rich benefit from these deals.
It is now clear that buying a home is a risky business, and it makes more sense to rent. Your money will not be tied up in this venture, you will have complete freedom from any flat fees, and if worst comes to worst, you can all the time get a roommate rather than suffering through foreclosure. The next time someone asks, “should I buy or should I rent?” tell them to get a pen and paper and write down the following:
“Renting or buying isn’t wasting money—it’s saving for tomorrow.”
What are your requirements?
In the end, renting or buying is not a more sensible choice as they both let you plan for your future. Buying a home is more an emotional decision than anything. If you do not have the money to invest in real estate, it is best not to invest at all.