All of us desire to have a home. It is one of the biggest achievements anyone can have.
However, not everyone is in the position to own their own home, or at least not right away. While having your own home is good in the long-term, renting a home can be a more practical choice for some people.
Deciding whether you will buy or rent a home is challenging because there are numerous factors to consider. Today, we will help you know more about the two options and see which makes better financial sense.
Here are factors to consider to see which option is better for you.
Finances
The first step in deciding whether you will buy or rent a home is understanding your finances.
Take a look at your emergency savings. The recommended amount of emergency savings is at least three months’ worth of your overall expenses. Having emergency savings will strengthen your financial health, leaving you with fewer worries in the future. Being financially sound does not only save you from worrying, it can also broaden your choices when it comes to the location and size of the home you will acquire.
When buying a house, make sure that you are ready for a downpayment. The recommended amount of downpayment is 20% of the total price. Putting down as much as reasonably possible is good since it can save you money on interest and other miscellaneous costs. When applying for a loan, you need to make sure that you have a good credit score and debt-to-income (DTI) ratio.
One tip for first-time homebuyers is that you can get preapproved for a loan, where the lender will give you a preapproval letter containing the amount and interest rate that you will receive.
This gives you an idea of the impact home-buying can have on your finances and also gives you considerable advice and direction on this entire process.
Present and Future Realities
In deciding whether to buy or rent a house, your present and future realities are as significant as your finances. Our present reality includes our school, workplace, and the number of people who live with us. We need to consider our current needs, especially during this pandemic.
Renting a home is less paperwork than buying a property. By renting, you can avoid paying upfront costs, property tax, and maintenance costs.
However, it is better to invest in a property that you own. This way, you know your money is going somewhere beneficial for you in the long run. Owning a property will help you build credit and equity. However, these benefits also come with costs, such as tax, and other miscellaneous expenses.
Seek the advice of real estate professionals
If you are looking for properties in Colorado, we’ve got you covered! The Noel & Martinez Team offers an interesting mix of small starter homes to large, high-end mansions in various Colorado communities like Boulder, Dacono, and Denver.
