How to Decide Whether to Buy or Rent a Home.
Owning your own home is the American Dream, but don't jump into such a major commitment
before you're ready.
With careful consideration, you can decide whether it is best for you to buy or rent
a home.
You will need Short-term future plan Savings account statement Handyman skills Basic math
skills Commitment Money for closing costs and agent fees (optional) and knowledge of
tax deductions (optional).
Step 1.
Think about how many years you plan on staying in your home.
If you aren't sure that you'll be in the home for at least 3 years, you'll likely be better
off renting than buying.
Step 2.
Check your available savings to see how much money you have available for a down payment.
If your available down payment is less than 20 percent of the purchase price, you'll likely
have higher monthly payments, and renting may be a better option -- at least until you
can save more money.
Be sure that you have enough to cover closing costs and real estate agent fees in addition
to the purchase price when buying a new home.
Step 3.
Think about whether you have skills or enough money to handle incidental repairs like a
broken air conditioner or clogged plumbing.
Renting means that these responsibilities are the landlord's; when you buy, the responsibility
is all yours.
Step 4.
Compare the rent ratio by dividing the purchase price of a new home by the annual cost of
renting a home.
Consider buying if the ratio falls below 20.
Consider renting if the ratio is above 20.
Step 5.
Calculate the tax breaks that you would receive from buying your home by estimating how much
interest you would pay on a mortgage and how much property tax you would pay within a year.
Determine whether this break is large enough to warrant buying a home.
Determine whether the tax deduction for purchasing your home exceeds the standard deduction that
everyone -- including renters -- is allowed to take.
Step 6.
Decide if you're mentally ready to commit to a large, long-term purchase.
Buying a home means that you can't pack up and move whenever you want.
If you're ready for this commitment, and your finances are all in line, it might be time
to find an agent and start shopping for your dream home.
Did you know The White House features 132 rooms, 35 bathrooms, and 6 levels in the residence
area.