Surely you have heard that with the money you pay for the rental of a property, you could pay the installment of a home loan. That’s right?
Faced with this common question, we set ourselves the task of analyzing what is the best decision between rent or buy a property.
Is the best decision to buy a property? Why pay rent if I can invest that money in my own home?
These questions are very common today and the answer is very simple. It all depends on your situation, your financial stability and your future goals.
This is stated by the expert in financial planning, Herbert Kyles, for the Investopedia portal.
If you want to know which is the best option for you, pay attention to the following paragraphs.
I must rent or buy a property.
Many people face enormous social pressure; especially if they are getting married, having children, and starting a family.
The norm says that you should already be buying and since we like to please others and have a good image in front of our family and friends, we think that the best decision is to own your own home.
Also read: What you earn is not enough for you? These thoughts make your money disappear.
Nevertheless, there is nothing wrong with renting. If you like the freedom that renting gives you, you can keep doing it. In fact, there are several reasons why Millennials prefer to pay rent.
- Flexibility and free time: Owning a property undoubtedly comes with responsibilities that a renter does not. Any type of repairs and maintenance work will be at your own expense. As well as paying your taxes.
- Spending priorities: The costs associated with a home can eat away at your savings. You should not only take care of the payment of an initial fee and the monthly installments. You must also equip the house, appliances, furniture, etc. If you have other investment projects, leasing ends up being a better decision.
Also read: What is the stock market and how to invest in shares.
What is more efficient in terms of costs.
The idea of ”buying is a better option” is very powerful. Sometimes it makes more sense in financial terms.
The truth is that if buying does not go against your priorities, you must sit down and do the calculations; since many times buying is not the best decision.
Also read: Make a simple budget using these 3 categories.
Compare prices between properties and areas, investigate new construction projects that can increase the value of the property, sit down to do your homework comparing the numbers. do the math sometimes it is not better to buy than to rent.
Once you’ve done the research, it will be easier to determine which option is best for you. Remember that everyone’s expenses and priorities are different.
What you need to analyze before buying a property.
If you’ve already made up your mind between leasing or buying a property, and you really want to buy, the next step is to determine if you’re financially ready to do so. Please note the following:
- Track your expenses and maintain a monthly budget.
- Spend less than you earn.
- Be actively contributing to your retirement plan and be able to continue even if you buy a house.
- You don’t have credit cards or other “bad” debt, or, if you do, you are actively participating in a repayment plan that won’t be interrupted if you buy a property.
- You have a reliable and stable income; and you are unlikely to lose it.
- You have savings available for a down payment that are separate from your retirement savings and emergency funds.
- You want to stay in the same place for the next five to seven years and it is unlikely that you will relocate.
- Your income minus your expenses, allow you to comfortably pay the mortgage credit installments.
Also read: How to make a quick and easy budget for your personal life.
Conclusion.
If you meet the above points, you have the green light to buy the house you want. If not, you will have to invest more time to put your finances in order before falling into more and more expenses.
Keep in mind that the important thing is not the monthly credit payments. Most people think only about that and when it comes down to it, these monthly payments are not the problem.
As a homeowner, you will be responsible for taxes, insurance, repairs, and maintenance; which substantially increases the value of buying.
We hope this information will be of great help to you 🙂
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