Housing is on the up and up, with demand high and sales robust. Still, for those new to homeownership, it may be difficult to determine which route—buying a home or renting one—is the most sensible.
“Millennials should weigh a number of factors before committing to any lease or mortgage,” said Corey Carlisle, executive director of the American Bankers Association (ABA) Foundation, in a statement. “With the cost of living continuing to rise, they must be prepared to handle the demands of their housing choice—whether that’s a rental property or homeownership.”
First to consider, according to the ABA Foundation, is your savings. Do you have enough money for a down payment for a home or a security deposit for a rental—and enough saved for emergencies?
Next, weigh all of your debt obligations—student loans, credit cards, etc. Can you reasonably afford to pay those debts along with the cost of a home? Generally, the ABA Foundation states, mortgage or rent payments and utilities should amount to no more than 30 percent of your gross monthly income.
Your credit score is an important consideration, as well, whether buying or renting. A low score can bring about a higher interest rate on a mortgage, or even prevent you from obtaining a rental. The ABA Foundation suggests taking action to improve your score before making the decision to buy or rent.
Non-financial factors matter, too. How long do you plan to stay in the home? Renters may have the option to move more often, but homeowners will build up equity. Keep this in mind when comparing your options, the ABA Foundation recommends.
For more guidance, contact a real estate professional. He or she can help you make an informed decision based on your needs.
Published with permission from RISMedia.