The decision to buy a home, one of the biggest financial investments you’ll ever make, can be empowering and exciting.
While the 2013 National Housing Pulse Survey by the National Association of Realtors showed that 80 percent of consumers believe buying a home is a good financial decision, it’s not always easy to know when the time is right to take the leap.
Choosing to become a homeowner takes not only a financial commitment but also the emotional maturity to create a plan and a timeline that suits your lifestyle and your budget.
Here are some of the factors that should be part of your decision to rent or buy a home:
1. How Do Home Prices and Rents Compare in Your Community?
While it’s easy to compare rental prices, when you look at the cost of buying a home you need to include not only your mortgage principal and interest payments, but also homeowners insurance, property taxes and possibly a condominium or homeowner association fee. Sometimes it’s more costly to rent than to buy, particularly when mortgage rates are low. A rent-or-buy calculator can help with your evaluation. You should also look at the long-term wealth-building benefit of homeownership that comes with rising values and increasing your equity as you pay off your home loan. A 2010 Survey of Consumer Finances by the Federal Reserve showed that the median net worth for homeowners was 30 times higher than the median net worth of non-homeowners.
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