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Having your own home is an exciting milestone in your life. It's a time when you need to determine whether you will buy a home or rent. There are financial emotional factors that will help you decide which option is best for you.
When you consider homeownership, you'll need to have your finances in order. Typically, a down payment of anywhere between 5% and 20% is needed, depending on the type of mortgage you secure. After you buy a house, it's important to have enough financial cushion to cover your lifestyle expenses.
There are multiple theories about how much of your gross monthly income should be devoted to your mortgage (some say no more than 28%) and overall debt (no more than 36%) to maintain your financial strength. But there are homeowners who exceed that threshold because they believe they will earn more money as their career grows and their home’s value will appreciate.
Owning a home means you can build equity if you hold the property long enough and it appreciates in value. You also might receive some tax advantages by owning, and your home could turn out to be a fantastic investment if you sell it after it has appreciated significantly. On the other hand, you might determine that it's better to rent and invest the extra money you would’ve otherwise spent on owning your home.
Whether to buy or rent also comes down to personal preferences.
When you own a home, you control everything from the color of your house to fixtures you want to install. Renting comes with restrictions on what you can do with your property, but when it comes to maintenance, you can call the landlord. Another consideration is amenities. Owning a home allows you to add a patio, swimming pool or outdoor fireplace in your yard when you have financing in place, something you likely won’t be able to do as a renter. Renters can get immediate access to similar amenities offered by the landlord. While renters won't have to worry about the upkeep, the cost of the pool, gym or valet parking is factored into the monthly rent.
Home ownership can provide emotional satisfaction that you might not experience when renting. Owning a home means you’re investing in a neighborhood and you can feel a closer connection to your neighbors and community because of your commitment. That said, you’ll likely worry more about local politics that affect property and zoning, and you’ll want neighbors who respect their properties in order to maintain the neighborhood’s value. As a renter, you can simply leave if you grow dissatisfied with your neighborhood.
Weigh all personal and financial factors to determine whether buying or renting is best for you. And, turn to United Community Bank for financing options that help you get the most out of your money.