June 24, 2020 2 min to read
Rent or buy – 6 questions to ask yourself
Category : Home and Garden
Should you rent or buy property? Regardless of the decision that you make, this is a key question for your financial future as you will be spending a lot of money on the property.
Whether it is rental properties that you are looking for or a residential property for sale, understanding the pros and cons of both are necessary to make the best choice.
Rent may appear to be cheaper in the short term, but it leaves you with no equity and no property of your own in the long term.
Purchasing a house appears to be a good financial decision in the long term, but, it may not always be the best choice under certain scenarios. It can leave you under heavy debt, which carries immense risks.
To determine whether you should rent or buy a property, you should ask yourself the following 6 questions.
1. What Are My Financial Goals?
If you buy a house, it will take you much longer to attain other financial objectives. In addition, you will have to make an effort to cut down unnecessary expenses and work harder to earn more so that you can pay the monthly mortgage.
You also need to save enough in order to make the down payment, which can be a huge amount since it is a substantial percentage of your property value.
With such heavy payments, you may not be able to pay off your credit card bills or student loan on time. There is also a much greater risk of default on your loans if you burden yourself with a mortgage.
Other financial objectives like retirement funds will certainly take a setback and take much longer to achieve.
Since your financial scenario is unique, you will have to decide accordingly. Make a list of your financial goals and prioritize them.
If you find that your own personal property is a top priority, then buying a home might make sense. On the other hand, you may decide to become financially stronger in order to handle the mortgage.
2. Do I Have Enough Cash for the Down Payment?
If you want to purchase a property, then you must have enough money to afford the down payment, which can be substantial since it covers a large percentage of your home price.
A large down payment is ideal since it gives confidence to your lender, and demonstrates your intention to pay on time. As a result, you might get a lower interest rate.
Besides having enough for the down payment, you must also pay for the closing costs, which are once again substantial. Experts suggest that a 20 percent down payment is ideal.
You may have to cut back on a lot of expenses and work harder for extra sources of income in order to afford the down payment…
Continue reading the article and learn more about properties on Enre Real Estate website.