| To Rent Or To Buy |
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No matter where you live right now, at some point you have probably considered whether to buy or to rent. The answer to the question of renting versus buying lies in the factors you must consider.
There is no right or wrong decision, but your personal situation determines which choice is right for you. First, remember that owning a home is a very involved process and is not right for each situation. If you have issues with your credit, move often, desire a lifestyle that is low maintenance, or cannot afford the additional expenses mentioned in the next section, you might be better off renting. Many people rate buying above renting as a financial decision, because if you rent, you are just "throwing away your money." On the contrary, there are many expenses that come with buying a home, and most people don't consider these expenses. Money you put toward your home in the form of mortgage interest, property taxes and insurance, closing costs, and routine maintenance, could also be considered "throwing away your money." Although the total you spend depends on many factors, these costs can add up very quickly. Many experts presenting the positives and negatives of renting versus buying tend to focus on the outrageous prices of a home on the east and west coasts. In these locations, the price you must pay to own a home is substantially less than you could spend to rent a similar home, so owning a home is much less financially viable for the average person. Huge down payments, extremely high monthly payments, and high property taxes make home ownership a near impossibility for people in these regions.
Putting aside local real estate costs, home buying is a different experience than renting for many reasons. In purchasing a home, you not only build equity, but you will eventually be able to pay of your home. Although a homeowner with a paid-off home still encounters expenses like taxes and insurance, these costs are much less than what you would spend on mortgage payments or monthly rent. Another positive aspect of buying vs. renting is that property you own continues to appreciate. In the Rolla/ St. James area, the real estate market experiences gradual peaks and valleys compared to other markets, but based on history, real estate has always appreciated. Although waiting for property appreciation requires patience, this is a benefit that renters never experience. A third benefit of buying vs. renting is that you can secure a fixed payment over a period of time, and maybe even reduce your payments. With a fixed-rate loan, your interest rate is locked in for 15-30 years, and even variable-rate loans have a limit on how high they can climb. You also have the opportunity to refinance and reduce your payments if interest rates drop. On the other hand, landlords always have the right to increase rents, and generally rent is raised on a relatively consistent basis as the market continues to grow. The final benefit to owning a home is not sizeable but still a consideration. Most renters are unaware that mortgage interest and property taxes are tax deductible, so part of your housing-related expenses can be deducted from your income, thus reducing your income tax liability. When deciding whether to buy or to rent a home, you should make sure that you talk to a lender to find out what your options are in the loan department, both what you qualify for and the possible costs involved with different kinds of loans. Also, consult a Real Estate Agent about current market conditions in your area. Consider the positives and negatives involved in buying a home versus renting a home, and make an educated decision based on your circumstances. The only wrong decision you can make is an uneducated decision where you don't consider all of the factors involved in buying versus renting a home. Justin Renaud is a REALTOR working in the Rolla Missouri Real Estate market. He has been working with buyers and sellers full-time for the last three years. His website http://www.justinrenaud.com is a resource for buyers, sellers, and homeowners to find helpful advice as well as resources discussing the areas of Rolla, MO and St. James, MO. http://EzineArticles.com/?expert=Justin_Renaud |
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