Six Questions on Renting vs. Buying a Home

April 20, 2012 | Posted By: Jim Wang | Categorized in: Finance, Home & Auto
It was once taken as a given that Americans would always buy a home provided that they had the means. Once a person began a career, started a family, and succeeded in putting some money aside, there was no question that he would soon look to become a home owner – to achieve the American dream.

But in light of the recent housing bust, mortgage crunch, and overall downturn in the economy, many people are suddenly realizing that renting a home may be advantageous in certain situations, even if one could afford to buy. Is renting or buying the right approach for you? If you’re not sure on whether you should rent or buy, here are six questions that may help you determine an answer:

What can I afford?

You first want to ask yourself whether you can afford a house in the first place. Typically, a new owner needs to pay a down payment of 5 to 20% of the home’s purchase price. You also would need to pay closing costs (around 5%) and budget some extra money for various maintenance, tax, and transfer expenses. If you’re looking to buy a $200,000 home, then, you’re going to likely need at least $30,000 on hand and up front. Without savings of that magnitude you may have no choice but to rent.

How long do I plan to stay in my residence?

The time you plan to live in a home has a tremendous impact on whether renting or buying is more economically feasible. In most areas of the country and in most financial situations, renting a house is advantageous if the occupants plan to stay for only a few years at most. If, on the other hand, you are looking to put down roots somewhere for the next 15 years, buying is often the right way to go. The New York Times offers an excellent online calculator to help you gauge the timeframe effect.

Will a home help me build equity or debt?

One of the main arguments in favor of home ownership is that it allows an individual to build equity. Unlike with renting, where the money you pay every month is never seen again, the mortgage costs incurred from home ownership can then be recouped when you sell down the road. But keep in mind that, if you don’t plan to stay in your house long or if your mortgage payments are minimal, you may find yourself simply paying off the interest on the mortgage instead of putting equity in the home itself. Ask yourself, then, what kind of mortgage payments you are capable of making. Your monthly payments should never exceed 1/3rd of your monthly income.

How will my taxes compare?

Owning a home can translate into substantial tax benefits – both when you are paying off your mortgage and when you someday go to sell your house. But home ownership also comes with annual property taxes that could offset any other tax benefits, especially for lower income owners. As such, don’t forget to assess the tax situation whenever you are considering a purchase.

Where do I want to live?

Location, location, location – that’s what real estate is all about, and the decision of buying or renting a home is no exception. Several reports have analyzed the markets in different cities to assess whether they are more renter-friendly or owner-friendly. In some places, a highly competitive rental market drives up prices in a way that is not matched on the home ownership front. In other places the opposite is true. Make sure, then, that you know how the two markets compare in the location of your choosing.
What kind of investor am I?

Buying a home is a significant investment. For most people, in fact, it’s by far the single largest investment they ever will make. If you’re an extremely cautious investor, you may worry that your home’s value won’t increase over time and you might instead decide to invest in bonds and CDs – and to rent rather than buy. On the other end of the spectrum, some investors don’t like the thought of tying up so much money in a house. They’d rather put that money towards stocks, mutual funds, and other more liquid investments. Along these lines, it is usually the middle-of-the-road investment mentalities that prefer to put money into a house.

These are six of the major questions to ask yourself when trying to decide whether to rent or buy. While it was once a given that people rented during certain periods of their lives and bought during others, that attitude is no longer the case. These days, it is ultimately most important that each person consider their individual plans and needs in order to make a fully informed decision.

Jim Wang, the personal finance guru behind is actually a longtime, well-respected, and famous member of the FatWallet community. Jim is one of the experts in the finance forum and has been sharing knowledge and helping people out for almost 10 years. You may also connect with Jim on .
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April 30, 2012 | Posted By: jflatfeemls
For Sale By Owner – as a homeowner what comes to thoughts when you hear this phrase. This is a four letter wonder word that can preserve you thousands and gives you a comfort promoting the house. Serenity of thoughts doesn’t only comes with money you preserve but promoting as for sale by owner also provides the convenience which is quite opposite for those promoting without this.
For many of the property owners the phrase for sale by owner might be new. For sale by owner indicates promoting the house independently with no outside interference of agent. Which indicates you choose the rate of the house, you choose the buyer you want to sell house to, you choose how much price negotiation to be done with the buyer and you choose how much you want to spend on promoting as For Sale By Owner.
With all the selection energy you are limited to preserve while promoting as for sale by owner But how to begin this? Well, the first thing would be buying a discount realtor who will record the house in flat fee mls. Discount Realtor is the one who has the accessibility to flat fee mls and will help you record as For Purchase By Proprietor. List in flat fee mls is not a big process when this is done by an knowledgeable discount realtor. He/She is the one who will help you in helping the way through and help in doing all the documentation to be done for MLS listing.
Another question would come in mind, what I preserve with discount realtor? Benefits would be huge if you take all expenses into account while promoting as For Sale By Owner. Right from start homeowners who decide promoting as for sale by owner begin to make savings.
1) They never need to hire any broker to offer their house. This would preserve those countless numbers in revenue commission payment homeowner would pay for closing the cope. Sales commission payment can be anything around 6-5% of the property value that can be in countless numbers.
2) Selling as for sale by owner never incur any advertisement price which is the best above all. Posting ads in local magazines and newspapers is a very costly and tedious affair.
3) When you offer as for sale by owner and record the house in flat fee mls, discount realtor would ask for few $100 as listing fees. This is a portion of price that homeowners might spend in printing ads.
4) Selling as for sale by owner you have the liberty to negotiate the property price with the buyer. This gives an power to these homeowners to close the cope at the price they think is appropriate.
5) Discount Realtor in compare to traditional broker won’t price hefty revenue commission payment and that would also preserve hell lot of money. This doesn’t have any impact on services provided by lower price broker to record your for sale by owner property. For more visit
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