Rent or Buy your own Home?
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Should you rent or buy your home? That is the question. More often that not you have probably heard the same answer – that it is always more
advantageous to buy your home and that by renting you are throwing your money away. Is this always true? It really depends on a variety of
Sometimes renting can be cheaper on a month to month basis than buying when you consider the expenses associated with owning a home. These expenses include but are not limited to property taxes, property and liability insurance and maintenance. As a homeowner, you will be responsible for all of these expenses. If the hot water heater stops working you will have to buy a new one. If you are renting then a faulty water heater simply means a telephone call to the landlord to handle repairs. On the other hand, when you are buying you are building equity. You will eventually own the property and it may also increase in value depending on the housing market and rates of appreciation.
In order to precisely compare the costs of buying versus renting you would theoretically have to be comparing renting versus buying the exact same house. Since this is not really possible it is necessary to consider other factors in addition to the actual financial cost issues. To compare the actual costs between the two options requires a comparison of factors such as relative cash flow (rent compared to monthly ownership expenses), length of term, and rate of appreciation. Without going into great detail this simply boils down to this. If you plan to stay in the home for an extended period of time the housing market does well and homes are appreciating then you are probably better off financially to buy as opposed to renting.
But there are other considerations when making the decision to buy or rent your home. This decision is not always simply about money. What are you looking for in a home? Consider your lifestyle and what is going to better suit your needs. A busy professional or graduate student working a full-time job and taking classes at night may not have the time or desire to worry about home maintenance issues. For the person whose job requires frequent moves buying a home may not be the best option.
Very few things are black and white and the decision to rent or buy a home is no exception. Write down the pros and cons of each alternative relative to your life circumstances and take a minute to think about what is important to you. Whatever you decide – whether to rent or buy – will be the right decision for you.
If you are thinking about buying a house then it pays to research all the types of loans available and then discuss your options with a mortgage professional.
FSO is an emerging online exchange that connects interested consumers to various professional mortgage services companies in its Australia wide network. Fill out the online form for a free no-obligation quote and see what they can suggest for your situation.
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