Renting versus Buying a Home

Just because you can buy a home does not always mean that you should. It’s important for you to consider if it is better for you to own or rent a home.

Here are five reasons you might want to rent:

1. You may be moving within five years. It usually takes five years to break even on your home purchase or investment.
2. You don’t want the responsibilities associated with being a homeowner. It can be expensive and time consuming to maintain a home.
3. You have a bad credit report. If your score is below 620, you will not get a good interest rate.
4. You have a high debt ratio. A high debt ratio means you may not qualify for a loan.
5. You have job instability. If your job is not secure, it’s not a good idea to buy.

Here are four reasons you might want to buy:

1. You want to build equity. The longer you own your home the more equity it will build. When you pay rent, that money goes down the drain.
2. You get a tax break when you deduct mortgage interest.
3. You want the emotional satisfaction of owning your own home.
4. It’s an investment. With low interest rates and home prices, buying investment property is a wise decision.

Links:

Own or rent a home

http://www.bogleheads.org/wiki/Owning_vs_Renting

Debt ratio

http://www.money-zine.com/Calculators/Loan-Calculators/Debt-Ratio-Calculator/

Deduct mortgage interest

http://www.irs.gov/publications/p936/ar02.html