Purse Strings is here to help you make intelligent choices about the best way to use your money, empowering you to take your financial futures in your own hands. The decision to buy or rent is a huge financial choice that has far reaching implications. If you rent, you can pay down debt. But home ownership is an investment that can really pay off. Which is the best choice for you? Consider these five factors to help make the right decision.
Debt. Do you have significant credit card debt? If so, you should consider renting and paying down debt. If not, good for you!!
Savings. Do you have savings of $20,000 or more? If you do not, you need to save up for that down payment. If you don’t have at least a 20% down payment you will have an additional cost of PMI insurance every month as part of your mortgage payment.
Stability. Do you envision moving within five to seven years? Selling a home you own with fewer than seven years of ownership could cost you – so if you don’t anticipate staying put for the next decade, buying is probably not the right choice for you. The likelihood of your house being a good investment is one you will live in long enough to build equity.
Income. Calculations show that the cost of renting is less than the cost of buying. You really need to have some disposable income to make home ownership make sense.
Responsibility. Home ownership carries with it significant responsibility and risk. Just because you can afford to own a home doesn’t mean you should – so assuming the financial picture is solid, do what feels right.
More than one in five home buyers is a single woman, and twice as many unmarried women are buying homes than single men. Single women make up more than one-third of the growth in real estate ownership since 1994.