There are numerous people that think about renting or buying homes. If you are among them, you need to think about various different factors. It is really important that you assess your financial situation for long-term planning. This is not as simple as it might seem. Yigang Tang shows us what you have to consider if you want to make a great choice.
Understand Expenses And Budgets
It is always really wise to review household budget and compare with expenses before you start buying a brand new house. It is important to find out exactly how much you can afford without having a burden put on personal budgets.
When referring to renting and mortgage payments, if you cannot afford to pay monthly rates on time, you simply cannot choose this option. So many several factors are linked with buying or renting.
Requirements For Buying Or Renting Houses
Your current credit score and credit history are really important and you have to fully understand them while talking with rental agencies and landlords. You are definitely going to be checked to be sure that you can pay everything on time. At the same time, checks involve potential problems with credit card balances or loans. When credit history is not that great problems appear with getting finances to make real estate purchases.
A strong employment history is also something that is worth looking at. Your current bank statements need to show a great picture. Just few rental agencies will require personal or professional references.
When Should You Consider Renting?
When you are not sure about current job situation and living paycheck you need to start saving money in order to accommodate for your future living expenses. That is going to help you build emergency funds you can rely on.
If funds are limited, you want to seriously consider renting if you see that not much money is available for down payments or for dealing with the extra costs associated with house ownership. On the short time frame you want to consider the last 2 years. At the same time, consider your plans to move in the following 2 years. If you want to move, renting is much better.
When Should You Consider Buying?
You should only consider buying houses in the event that you can cover all additional costs associated with house ownership. You have to pay closing costs and down payments before you will be able to buy real estate. Most of the banks are going to ask you to make a 20% down payment plus around 1% as an extra fee.
When you are faced with a large debt, all your savings should not be put for a down payment. It is always better to pay off the entire debt and wait until you get in a much better financial position. When no debt is present, you have to think about renting or buying as it is time to do so. Your current situation is what you have to take a close look at as you make your final choice.