Choosing your living situation, especially as you get older and make more responsible financial decisions—i.e. Opening savings accounts, choosing insurance, and managing debt—isn’t an easy one. There are a lot of pros and cons to both renting and purchasing a home, and it’s up to you to decide which one is going to work for your own financial situation. Most people in the country will probably rent before they buy since rentals are much more flexible and easier to obtain. However, most people don’t want to rent forever, especially if they’re in a spot where they can afford to own a home, or at least take out a mortgage.
Here are your answers to if you should buy instead of rent and what’s right for you!
Do you owe a lot of debt?
If you’re in debt, whether it be due to student loans, car payments, credit card bills, or whatever else, then you might want to work on chipping away at that before purchasing your first home. Like we mentioned earlier, most people in the country need to take out a mortgage before they can purchase a home. And if you’re already in debt, a mortgage is going to put you in a sticky situation. If you want to purchase a home in the future, start by eliminating as much debt as possible. Once that’s diminished, and you don’t have to worry about interest building up, you should start saving towards a downpayment. In the meantime, renting will be a better option!
Can you save up for a downpayment?
In order to take out a home, you need to have a chunk of money saved up for a downpayment. This can be anything from 3.5% and beyond. Most financially savvy people will recommend saving a higher percentage to avoid paying more in interest down the road, but we understand that not everyone can afford to do that. When you rent, the money you pay each month isn’t going towards ownership. When you buy a house, it does! That’s what is usually the kicker in the rent vs. home argument.
Can you afford the monthly payments, taxes, insurance, and more?
When you’re considering buying a home, it’s important to note that your monthly mortgage payments aren’t going to be your only expense. You’ll also need to pay for the home’s taxes, and homeowners insurance. Additionally, you’ll also be responsible for any mishaps to the house including leaky pipes, pests, electrical issues, plumbing, and other fixes that your landlord would normally cover for you. When considering how much house you can afford, or if you can afford one at this moment in general, make sure to consider all of the details, not just the mortgage.
Newlywed or not, affording a home is a big and daunting financial decision to make. Don’t feel pressured towards renting or buying. Ultimately, it depends on your finances and what stage of life you’re in. We hope you found this post informative and helpful in your journey towards financial wellness! Stop back regularly for more content regarding affording weddings, newlywed life, and more!