Should You Buy or Rent Your Home in Today's Economy?

Those of us who are conscious of the current economic conditions would say that choosing between owning and renting a house at this time poses quite a challenge. It is very easy to fall prey to others whose opinion seemingly sound "good." However, we cannot deny that this requires expertise on the part of the information source. In so doing, we can possibly avoid costly or unnecessary mistakes. Preferring the right information source with reference to owning or renting also affords us the chance to anchor our decisions from an authority on the matter.

A good adviser takes into account several factors to help you come up with sound financial decision. One, he must consider your individual situation; and two, he must be experienced enough to back his claims with solid evidence. Since no two people have exactly the same predicament and your case is unique from the others - it is crucial to weigh the costs and benefits of buying versus renting. As the co - author of the book Equity Happens (Russell Gray) puts it, "Do the math!"

With that being said, I'm not going to try and tell you which option to choose. I cannot possibly do that because I don't know your particular situation. I will tell you some numbers to think about and I will say that for many people, right now is an amazing time to purchase a home. You can start with monthly expenses. In the case of renting, add up your rent plus any additional fees and the utilities you must pay.

For ownership expenses it's a little trickier. You must add together more items and might need the help of professionals to determine what the expenses will be. The main expenses are commonly abbreviated with the acronym PITI. This stands for Principal (the amount of money you pay toward the principal of your loan), Interest (the amount you pay toward the interest of the loan), Taxes (property taxes you must pay), and Insurance (both property insurance and mortgage insurance, if applicable).

An easy way to see the difference between buying and renting is to compare their monthly monetary expenses. Aside from the PITI costs, owning a house comes with utility expenses and other maintenance costs such as lawn care, appliance, occasional new shingles, etc. that are usually not present in renting. With the latter, you shell out only the exact amount of money every month. Nonetheless, it is imperative to pay attention not just with the monthly operating cost but the long-term financial benefits as well.

If you are the type of person who favors long-standing gains over the immediate, then buying a house is for you. Renting will perhaps save you some of the costs apparent to the other but after several years of paying, you still do not have a title to call your own. In addition, your monthly rental becomes higher as time goes by. On one hand, the cost we pay to home ownership remains constant through the years except for some expense that inflation affects (i.e. utilities, insurance, etc.). What's more exciting here is the promise of equity from all the payments you made towards your owning a home!

Buying your own home boosts your morale and gives you more freedom in making changes with it. There is a feeling of pride here aside from the fact that you do not have to ask permission whenever you want something done like painting the walls with the color you wish for. You also derive satisfaction in terms of enjoying the benefits home ownership provides. However, your decision might have a turnabout since renting requires minimal maintenance as opposed to the other.

Often, financial consideration plays a big role but also brings into mind subjective feelings over the argument: to buy or to rent a house? To be more specific, purchasing expensive appliances no longer bothers you when you have huge savings from renting instead of owning. Or maybe, the freedom to do whatever you want with your own house appears inconsequential if you will note the massive expenses you shed off just to purchase your home. Either way, the dictum "numbers do not lie" proves that the former is still weightier than the other.

Conversely, this piece wants to point out two important concerns relative to renting and buying a house. One is to seek advice from the right authority to help you identify the best course of action. Next is to examine carefully both the financial and subjective considerations. The gains or benefits usually become apparent on a long term basis. Finally, it would help to bear in mind that we are in a buyer's market where ownership is deemed favorable over renting.

About the Author: Alexandria P. Anderson is a Minnesota Real Estate Agent that helps people to find and purchase Minnesota Townhomes and other properties in the Twin Cities of Minneapolis and St. Paul.