The decision to rent or buy is a highly personal one, and often must be made by weighing both objective and subjective factors. What makes sense for one person's financial situation may not make sense for another. So how do you know which move is right for you?
Both renting and homeownership have positive and negative aspects.
Let's first take a look at renting:
|You don't have to pay for repairs and maintenance||Whether or not repairs are made in a timely and satisfactory manner depends on your landlord|
|You don't have to pay extra costs like property taxes and common charges||Rent tends to go up every year|
|The money you would use for a down payment can instead be invested||Paying rent doesn't build equity|
|Ending a lease and moving is much easier than selling a property||You cannot customize a rental property|
And now consider homeownership:
|Your home may build equity||There is no guarantee that your home will appreciate in value|
|Predictable monthly payments with a fixed rate mortgage||The upfront costs are numerous|
|You can customize, renovate, or add on to your home||You are responsible for repairs, maintenance and replacements|
|Potential to make a profit by selling, or by renting the property out if you choose to live elsewhere in the future||Not advisable for those who don't plan to stay put for five years or more|
If you decide that purchasing a home is the right step for you, give yourself plenty of time to prepare your finances. Remember, you'll need money for more than just the down payment; take closing costs, home inspection and appraisal fees, homeowner's insurance, and other costs into consideration as well. In addition, be sure not to leave your bank account empty after your home purchase. It's essential to leave yourself an emergency fund that can cover unexpected repairs and your living expenses for several months if the need ever arises.
The information mentioned in this article is for informational purposes only, is intended to provide general guidance and does not constitute legal or tax advice. Each person's situation is unique and may materially differ from the information provided herein. You should seek the advice of a financial professional, tax consultant and/or legal counsel to address your specific needs before any financial or other commitments regarding the issues related to your situation are made. Popular Bank does not make any representations or warranties as to the content contained herein and disclaims any and all liability resulting from any use of or reliance on such content.