For many decades, buying a home was synonymous with achieving “The American Dream.” But in light of the recent downturn in the housing market, many are debating whether it’s smarter to rent or to buy. Here are some pros and cons:
• Renting comes with fewer responsibilities. When something needs fixing, a call to the landlord solves the problem. When you own, you make the repair arrangements and pay the bills.
• Buying gives you more freedom. You decide how you will decorate, if you want a pet, etc. When you rent, the landlord makes those decisions for you.
• Buying a home can be an investment. As you pay your mortgage, you build equity. At the end of the mortgage, the home is yours and you have a nest egg to fall back on. When you rent, there is no equity.
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While it has become more difficult to secure a mortgage in recent years, right now people who have managed their money well can finance lower-priced homes at historically low interest rates. Should you decide that homeownership is for you, before you begin house hunting take a homebuyer education class for some essential information on the purchasing process. And remember that after you find that perfect home, your budget will take on new expenses including insurance, property taxes and repairs.
Ultimately, buying or renting does not determine your success. What matters is balancing your budget on a monthly basis, building and maintaining savings, meeting your needs, and fulfilling your wants as appropriate.
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