How to Decide Whether to Rent or Buy a House

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The purchase of a house is the largest financial investment most people will make in their lifetime. Weighing the decision to buy a house, instead of renting, involves many factors. Your choice will affect your lifestyle.

Difficulty:

Moderate

Instructions

1. Look at the neighborhood. In a desirable location, owning a home will be a financial investment, if you buy it at a fair price. However, if the neighborhood is crime-ridden or otherwise undesirable, a renter can move out without having to sell his house first.

2. Consider the level of responsibility. Renters are not responsible for upkeep on their home, while owners must spend the time and money to maintain their residence. For some, this is an important factor.

3. Weigh out the advantage of building equity in a house you own, against the financial risk you will bear if property values fall. Should it become necessary to sell your home when the housing market is depressed, you could lose money.

4. Determine your mobility needs before buying a house. If your career requires to you relocate annually, you may be better off renting. Unless you live in a place where the housing market is highly competitive, the selling period of your home can be a detriment.

5. Buy a house if you plan to live in the area for an extended amount of time and if you want to make your own decisions concerning the property. In addition to having an investment, homeowners have the freedom to landscape, make structural changes and add on to their house if they choose.

6. Rent a house if you plan on living in the neighborhood for a short time or if you are unsure about the housing market. Renters can easily switch their child from a bad school to a good one, just by moving to a different part of town.

Tips & Warnings

• Rent until you are ready to make the financial commitment necessary to buy a house.