You should consider renting if...

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You should consider renting if...
2 years ago
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Most real estate experts advise buying a home instead of renting one. This is very wise advice. Renting a home is a bit like staying in a motel; you pay quite a large sum to live temporarily in someone else's place. A home, on the other hand, is an investment. Every mortgage payment you make is contributing directly to your investment. But sometimes home ownership isn't the wisest option. In some cases, renting a home - at least temporarily - may save you thousands of dollars. You should consider renting if . . .

1. You are in a seller's market. A seller's market benefits the sellers of a home, not the buyers. In this type of market, house prices are inflated and competition among buyers is common - and often fierce. It is a great time to sell your home; it is not the time to be purchasing a new one. So what should you do if you have just sold your house in a seller's market and are looking for a new home? Listen to the experts. If real estate agents and financial advisors foresee the seller's market lasting for a year or two, then you should purchase your home now. In a few months time, prices may be even higher than they currently are, and you may lose thousands in a real estate deal. If the experts believe that the market will soon favor buyers, you might want to rent for a few months before stepping onto the property ladder. By waiting for prices to drop, you can potentially save thousands of dollars on your new home.

2. You have relocated to a new city. Since moving is very stressful, most people only want to do it once. But it might be wise to rent a home or an apartment in your new hometown for a few months before spending thousands of dollars on a home. The city is unknown territory to you; as a result, you do not know the locations of schools, shopping centers, doctors' offices and hospitals. You need to take time to explore a neighborhood - and determine if it is a family-friendly area or a crime-ridden wasteland. By renting a house in your preferred neighborhood for a few months, you can see if the area fits your lifestyle. Once you've found your dream neighborhood, you can purchase your home knowing that the location is both safe and convenient.

3. You are trying to improve your credit rating. Those three little numbers can say a lot to a mortgage broker or lender. If your excessive spending in the 90's is still haunting you by way of your credit rating, you might want to wait a few years before applying for a mortgage. Anyone with a bad credit rating or negative items on own credit report, will have a hard time finding mortgage financing. Since people with a bad credit history have a high risk of default, they will also have to pay higher interest rates than those with good credit scores. If your current living situation allows it, rent for a few years while you work to improve your credit rating. In time, you will qualify for a higher mortgage with a lower interest rate, and you can then purchase the home of your dreams. And owning your own dream home is certainly worth a few years in a rental.

4. You do not have the time or the money to devote to a home. Owning a house is a lot of work. The regular maintenance tasks alone can keep a homeowner busy on most weekends - cleaning the gutters, changing the furnace filter, and cleaning the ducts. The expense of owning a home can also take a toll. Houses are not built to last forever, and an aging home will eventually need a five-thousand-dollar investment for new windows, floors, siding and roofing shingles. If you want to live a carefree life - and you don't want to become the caretaker of a property - then renting might be your best option. You will lose out on the investment potential of a home, but you won't have to spend your Saturday mornings fixing a leaking tap.

The decision to rent or buy can be complicated, but it all comes down to one factor - money. Everyone is trying to save money, and while renting at first seems a surefire way to lose money, it could be the cost-effective option. Don't think of renting as a quick stay in a comfortable hotel. Consider it the first rung on the property ladder - a step you must climb if you want to own a home.

By Amy White
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