Having a roof over your head is a basic need. Many people are, however, torn when deciding to either rent or buy a home. Several fundamental questions need to be answered before settling on which option is best for you. Below are some key considerations experts advise potential homeowners to look at before deciding which way to go when searching for a home.
Duration of the Stay
A general rule of thumb when looking for a home is to rent for short-term and buy for long-term stays. Simply put, you do not need to buy a house if you intend to stay in it for less than two years. Conversely, you do not have to rent it if you are planning to live there for the remainder of your life. Performing calculations based on the cost incurred during the duration of the stay will prove vital in ultimately deciding which way to go. Do not hesitate to purchase if the markets are open and show cemented signs of booming shortly. Again, not all markets are the same. Your duration of stay will help you judge whether you will be living in a house whose value will plunge in the upcoming market or increase the profitability through appreciation as you enjoy the comforts of the home.
Live Within Your Monthly Payments
Every first-time home buyer should live on their monthly payments regardless of what their dream home is. If your monthly cash flow reads $3000, you have no business taking a mortgage that will cost you $5000. Alternatively, you can secure a mortgage that charges $2500 monthly if your income reads $4000. Generally speaking, your payments should not always exceed more than 60 percent of your monthly cash flow. You can also weigh the monthly options and see if it evens out 10 to 15 percent of the total income. If this is the case, purchasing would be a viable option. Expert opinions point towards owning the property most of the time. Talk to your financer and realtor to find you a good deal that will match your income without ruining your budget.
Always have a look at total costs that accrue when debating on whether to buy or rent a house. In the first place, buying a home in the Bay Area real estate market exempts you from homeowner’s tax if you own up less than 20 percent equity of the house. Once you make payments that exceed the 20 percent equity, you are qualified for an extra tax deduction. Always talk to a realtor to know how your tax deductions will play out should you consider buying. Additionally, other costs that accrue when you buy a home include insurance, which is mandatory for most households. You’ll also need to get accustomed to maintenance costs and property taxes after the purchase, which will further increase your monthly payments. If you cannot handle the additional costs that accompany purchasing, renting will be a good option for you.