To Rent or Buy a House in 2020: That IS the Question
Choosing whether to rent or buy a home in the coming year is a major decision. According to the PEW Research Center, more households are opting to rent than buy since 1965. The recent housing crisis and economic downturn of the past decade have left some people feeling scared about investing in homes for sale. On the other hand, home ownership is still regarded as a safe investment, particularly in stable real estate markets where houses tend to hold or increase in value as a rule. If you are on the fence about whether to rent or buy a house in 2020, consider the following helpful advice.
One of the first questions a banker might ask you if you try to get pre-approved for a home loan is, "how much down payment do you intend to offer?" Having 20% of the home's cost means that you will not be obligated to pay private mortgage insurance--and that's a money savings. If you have 10% to 20% to put down on a house, you're are in a better position to buy a house than if you didn't have this amount. If you don't have a healthy down payment to offer, you might want to rent in 2020 in order to save for your down payment.
If you're carrying a lot of debt--credit cards or student loans--you might find it difficult to secure a home mortgage. Of course, many buyers still do, but if you are finding it challenging to get pre-approved for a mortgage, consider renting for a period of time so you can improve your financial situation. Buying a house is a major financial decision and its expenses are not limited to the mortgage. You may suddenly need a new HVAC system or plumbing repairs; too much debt could make it difficult for you to maintain your house and keep up with mortgage payments.
If you plan to live in the same location for three years or more, you could be a good candidate for buying a house. If there are many houses for sale in your desired locale, you might find it fiscally beneficial to buy a house instead of renting one. In a buyer's market, you stand to make an advantageous real estate deal. If you know that you will likely need to relocate within three years, it can be cumbersome to have to sell a home within a strict time frame. You might consider renting in this type of situation.
If you value your independence, you probably are already leaning toward buying a house rather than renting one. Many landlords and renting companies have strict policies about what renters can and cannot do to their living spaces. If you rent, you likely will not be able to alter the major appliances or even the paint color for each room. When you buy a house, on the other hand, you have the freedom to make any changes you like to enhance your lifestyle. This is one of the key reasons why so many people are anxious to buy a house rather than rent one.
It's a personal decision whether to rent or buy a home. Reflect carefully on your finances as they will be a good indicator of whether you're ready to buy or not.