You’re due for a move, but should you rent or should you buy?
There are 3 things to think about when making this important decision.
First of all, how long are you going to stay there?
If you’re going to be there at least 4 years, buying makes sense. Less than that, and you run the risk of having to sell into a down market.
If you’re not going to be there at least 4 years, you’ll want to rent. Renting gives you greater flexibility and you don’t have to worry about the cost of maintenance or upkeep. The downside of renting is that you’re not gaining anything for those rent payments that you’re making.
Which brings me to the next question: Can you afford to buy? Because rents have gone up across so much of the country, it’s now less expensive to buy than it is to rent in many areas.
You also get some nice tax deductions that come along with having a mortgage.
You might be able to get into a home with a down payment that’s less sizable than you thought it would be.
Fannie Mae and Freddie Mac are now rolling out mortgages with down payment requirements of just 3%. Although one thing you do have to keep in mind is that there are other costs associated with buying a home. There are closing costs. You’ve got maintenance. You’ve got insurance. You have to think about taxes.
The last question you want to ask yourself is, how’s your credit score? If your credit score is not in tiptop shape, you may want to consider renting rather than rushing to buy, and the reason for this is that you won’t lock in to the best mortgage rate possible unless you’ve got a tiptop credit score.
This is something that you’re going to be stuck with for quite a while. So take a few months, up to a year if you need to, to boost that credit score to where it needs to be and continue to rent in the meantime.
For extra help you can always check out the calculators at Bankrate.com to figure out if you should rent or buy.