Should you rent or buy a home – Before you decide to purchase property,think of the next best option – renting.These both are worlds apart in each and every way.Depending on where you are set in life,your priorities,budget and commitments,you can make a decision.
Should you rent or buy a home – RENT
- The best part of renting property is the price you pay.Some people are of the opinion that when you rent , you are “throwing away the money” as compared to paying a mortgage with the same amount of money.This is a matter of perspective depending on your need and current life plans.
- Mortgage – This cumbersome life long payment towards the purchase of a house is what you are saved from if you rent.This can be approximately in the range of atleast $1000 a month
- Taxes and Maintenance – You are saved from house and property taxes as well as constant maintenance,repairs and upkeep.As a tenant,you would be required to only pay for utilities which can save you from these other expenses.
- Flexibility and Freedom – You can pack up shop and leave whenever you wish – as long as it fits within the rental agreement,but atleast you wont be stuck with a place for a lifetime.This gives you the freedom to travel to other states and countries without a mortgage to pay for or a home to maintain.Homes are like children,they need constant nurturing and upleep.
- If you are single and not with family,renting a condo or small apartment is the best choice,not only because of the cost factor but also because you need a smaller space
Should you rent or buy a home – BUY
- It is a great investment and is equal to money in the bank.Over the period of the mortgage term,you can expect the value of your real estate to appreciate atleast three fold.Your monthly payments are a substitute to rental payments you would have otherwise paid if you rented out a place.
- If you are starting a family,it is the best choice you can make for yourself as well as for your family.The american dream of a 3 bedroom house in a suburban city is actually what just a small percentage of working class people in the US live for.With a mortgage,that dream is possible.
- If you have a modest income,you can easily secure a home loan from a bank,credit union or financial institution.
- A large home that you buy can also double up as a secondary source of income.In America as well as Canada,renting out the basement and/or one of the bedrooms has given an extra $750 – $1200 to home owners.
- Downpayment – One of the pre conditions that need to be satisfied before securing a home loan.This amount is a lump sum that needs to be given to the lender.It can vary from 3% onwards.the higher the down payment,the shorter the term and loan amount.Putting down a larger down payment makes your mortgage easier to clear.
- On overlooked advantage of buying a home is a reverse mortgage,which is explained below in detail.
Home buying for retirement – REVERSE mortgage
A new concept that has emerged over the last decade is that of a reverse mortgage.This is a perfect way for retirees to earn some extra income if they do not have a nest egg or retirement plan.How does it work?
In a way,this works something like a home refinance.In other words,the bank buys off your home giving you monthly payouts,in the same way you paid off your mortgage while purchasing the same property.At the end of the term,your house will be bought back by the bank.This is a good income for retirees who do not have next of kin or do not want to will the property to them.