The fluctuating housing market makes it difficult to determine if it is better to buy or rent a home. It is often advantageous to buy, but you may want to wait until the opportune time to purchase a new home to get the most out of your investment. When you rush to purchase a home, you might end up spending more than you should and committing to a mortgage with a high interest rate. The NY Times has a calculator to determine whether or not it is better to rent or buy in the near future. But you should take other factors into consideration before you choose to rent or buy.
Your Finances
Before looking at renting or buying options, reflect on your finances. Do you make enough money to commit to a mortgage for 15 or 30 years? Right now you may have a good job, but will that last? It might be wise to increase your credit score before you decide to purchase a home. The better your credit is, the higher your loan amount and the lower your interest rate are. Try to put yourself in the best position possible before you commit to buying a home.
The Condition of the Housing Market
Look at the current condition of the housing market for the areas you are interested in. Check the prices of the market for the past couple of years to get an idea of how the economy in the neighborhood has progressed. The city you wish to reside can play a big factor on making a decision to rent or buy. CNN Money has assembled a list of factors to consider when thinking about renting or buying in a particular city.
The Economy
A bad economy may not be a bad time to buy a home. Although you won’t qualify for the same APR you might when the economy is strong, you will be able to purchase a home for a cheaper price. Look at a 15-year mortgage as opposed to a 30-year mortgage to lower the total amount of interest you pay. As long as you have a reliable source of income, you should consider making an investment into a home. Find a home that sellers have been trying to sell for months and talk them down to a reasonable price. Patience is important in making the right choice to purchase a home. Do not commit to buying a home if you do not feel comfortable living in it. You have the option to move when you rent, but after you purchase a home, you usually cannot move for at least a couple of years. In the long run, it is wiser to invest because you have the opportunity for financial gain. Your home’s value should increase over time, and you can sell it for a profit or refinance. Consult with your real estate agent to learn your options. Let him or her guide you and provide you with insight on when you should buy a home.