My story of leaving home ownership for the freedom of renting should not be taken as advice. You’ll have to weigh the pros and cons of both and make the decision best for you. Here’s what to consider:
- Where do you live? (Or want to move?) For those in the priciest real estate markets (New York City, San Francisco, Boston and others), renting may be the only option for most people.
- How long do you plan to live there? If you’re going to be in a home for three years or less, most sources say you’re better off renting.
- How important is having growing home equity? You can borrow against that if you need to. You can’t borrow against the rent you’ve paid a landlord.
- Do you have enough cash on hand? It’s the upfront costs that prove a deal breaker for some would-be home buyers. There’s the down payment (at least 20 percent of the purchase price is considered ideal) plus all those pesky closing costs, which could be 3 to 4 percent of the loan amount.
- Have you budgeted for repairs? The closing isn’t necessarily the last big outlay of cash a homeowner will have. Having adequate savings for repairs is crucial.
- Have you done the math? There are plenty of online calculators, such as the one at Realtor.com, to help you determine whether to rent or buy.
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