The Rent or Buy? Coin Toss
© Lisa Hart Daily
More likely you are deciding whether to plan for a home purchase.
Yes, there are homeowners debating whether to sell the townhouse and rent for a while to take advantage of the seller's market (I worked with one). There are also those who are looking to downsize from the house they own, and wonder whether the renting life is a good choice. And some people are in a stage of life when it is not easy or smart to make a fifteen- or thirty-year major financial committment.
However, most articles on the subject seem to be written for renters to help them decide whether to become a homeowner. In a time when two-thirds of the US population live in a home that is owned, not rented (statistics courtesy of the US Census Bureau), the articles are probably directed to the right audience. Isn't homeownership the American Dream?
Well, yes, but...
The buy-a-home bug doesn't hit every one at the same time in life, and never comes to some at all. It is just not appealing, or possible, for many people. Many people (myself included) are (or were) confirmed renters.
The bug might come in stages. Renting an apartment becomes renting a house. Renting a house becomes "wow, look how much space there is-and a yard!". Which becomes, let's just see what house prices are in the neighborhood. Which becomes....I'll never be able to do this.
That last one is just a maybe. Not a financial expert or pretending to be one, I linked this topic to a couple of calculators generated by knowledgeable personal finance sources. Plug in rent costs, mortgage payments, interest and insurance rates, and a few other numbers. Voila!, you get a comparison of which provides a greater financial benefit long term.
Now, if you are currently renting, but believe you will benefit by buying a home, this analysis becomes just one factor in making the decision. Only you know how stable your employment situation is, or how much you can get together for a down payment and how big a monthly mortgage payment you can afford. (Not coincidentally, these are the things the bank wants documented if you decide to pursue home financing). Calculators are also available for looking at scenarios for different down-payment percentages and monthly payments. Click here for one provided by Quicken.com: http://www.quickenloans.com/lpcontent/Cn...
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