Your decision whether to rent or buy your home is a strictly personal one. A lot more goes into it than just the finances involved in a home purchase. You have many issues to consider.
Let s start with the cost of a home. Everyone will tell you that it makes financial sense to buy. They say that if you rent, you are just throwing your money away; in ten years, you ll have a drawer full of receipts. Yes, that s true, but there s more to the price of a home than the price of the home!
Most people use the ten percent rule to calculate a possible mortgage based on their best guess of a home s cost. For instance, if you buy a home for $200,000, you ll pay about two thousand a month. But that s such a rough guess.
You can start with the cost of the home, but don t forget to deduct your down payment. Then figure out what interest rate your bank will give you. You also have to allow for your homeowner s insurance and your property taxes. Plus, if your down payment is less than 20 , you ll have to pay for PMI private mortgage insurance.
Besides the cost of the home, you have to pay the cost of updates. Just about everyone who buys a home has to do renovations or simply wants to do them. This can range from inexpensive options like painting the walls to an ultra expensive roof job or electrical updates.
You also must consider the cost of upkeep. Will you be able to set money aside in case the furnace breaks? Can you clean your own gutters when it s time or will you need to hire someone? Even yard maintenance can add up to a lot of blood, sweat, tears, and dollars. All in all, buying is an expensive undertaking.
On the other hand, maybe it s the right time for you to buy. Purchasing a home cements your status within your community. It s a symbol of solidity, not only of your integrity but of your financial solvency. Your participation in community debates concerning new developments or tax levies takes on real meaning for you. There s an unsung but definite status attached to being the king of your castle.
It might be a drain to come up with the down payment, and maintenance costs can be a drag. But there are certain tax incentives to owning a home. As time passes by, your home s value will grow and your mortgage principal will shrink. The investment value or equity in your home will stand you in good stead in the years to come.
Plus there are the additional freedoms that come with owning your own plot of land. You are the primary decision maker, whether it s a question of major remodeling or just banging nails into the walls. Get a dog. Plant a garden. Fence in the yard for your kids.
Many people welcome the challenges of home ownership. If you re a handyman, the work of checking the roof each fall is negligible. Creating a backyard where you can relax and entertain racks up high satisfaction levels. And if you re not good at some of the chores, barter services with your neighbors do their taxes in exchange for some plumbing help.
Ultimately, only you can decide whether you should rent or buy a home. Consider your motivation, your finances, and your preparedness to take on all the responsibilities, and then you can make the right decision.
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