Home Ownership Is Not For Everyone

The argument over which is better, renting or owning a home is not a new one. For the most part the scales tip in favor of buying a home versus renting to get the most value for your money. While it is true that money spent on rent payments is money that you will never see again, to say you are throwing it away is a bit of a falsehood. It is undeniable that there are many benefits to home ownership but that does not make it the right choice for every person. When it comes right down to it, your decision to rent or buy should be based on several factors beyond your monthly housing payment. Here are a few things to consider before you commit yourself either way.

• Consider your lifestyle- How long do you plan on living in your current location? Many of the financial benefits of home ownership are not immediate which makes renting a better financial move for people who anticipate moving in the near future. Even if you plan on staying in the same location for several years some people simply do not have the time, money or desire to be responsible for the maintenance and repairs that come with home ownership.
• Consider the financial differences- When you buy a home you not only have a mortgage payment to contend with but also insurance, property tax, and maintenance costs to consider. If your home is part of a home owners association, there will be fees associated with that membership as well.. Looking at the two options side-by-side on a strictly out of pocket cost comparison each month, most times the home owner will pay more than the renter.
• Consider your willingness to commit- When you rent a property you generally have the option to move without incurring a financial penalty as long as your work within the scope of your contract with your landlord. This is not the case once you take on a mortgage. That is not to say that once you buy a home you have to stay there forever, but you will not have the luxury of getting “out” of your mortgage the same as you would with a lease. Most mortgages are a long term financial commitment with few exit strategies beyond fulfilling your financial obligation by making payments or paying your loan off early through the sale of your house.

Buying a home is a major decision which is not easily reversed once you have entered into a contract with a lender. If you are at all uncertain as to whether you are ready or able to fully commit to a long term financial obligation, you should continue to research your options until you are certain one way or the other. This is one situation where it pays to take your time and proceed with caution.