First things first... are you sure?
Have you really given a deep thought to this decision? Most of the sources I have tracked start by asking this question.
Buying a house is the most important financial decision for the majority of the population. Therefore, you should keep in mind that this commitment will require a substantial amount of your present and future time, money and efforts. On the other hand, for many this is a question of status and becoming a homeowner is something they need to do.
I am not trying to discourage you from buying. My purpose is to provide you with the opportunity to ask yourself... Is buying is the best option given your circumstances?
Let's start by answering the following questions:
Buying a house is the most important financial decision for the majority of the population. Therefore, you should keep in mind that this commitment will require a substantial amount of your present and future time, money and efforts. On the other hand, for many this is a question of status and becoming a homeowner is something they need to do.
I am not trying to discourage you from buying. My purpose is to provide you with the opportunity to ask yourself... Is buying is the best option given your circumstances?
Let's start by answering the following questions:
"Buying is always a good investment", far from true
The real state market is considered cyclic. This means that in the short-term, the price of real state can go up or down, but in the long-term, you will probably make money, selling a home for more than you paid for it years ago. However, the length of each phase of the cycle is unknown: not even experts agree or can predict the future accurately. So if you think you can always make money on real state in the short-term, it is time to rethink that statement.
Are you staying for long in your dream home?
Tricky question. How am I supposed to know? Well, I am just asking because if you are buying now and planning to sell in say 2-5 years, even if the real state market is moving upwards, you might not be able to sell high enough to cover the expenses from the purchasing contract. Nobody can tell if you will move sooner or later from your actual residence but you might have some things going on in your life that can serve as valuable clues. For instance:
- Children. Do you have any? Are you planning to have? Does your actual residence suit your needs? Are you living near the school you want your children to attend? Are they leaving for college soon? The more important your children are in your family, the more likely your decisions about housing will be influenced by their circumstances.
- Work and finances. Do you have a stable job? What are your perspectives for the near future? Do you see your sector changing in the next few years? Will you be asked to move if promoted? If you get fired, do you have any assets or income to help paying a mortgage? Current job market trends point out the best career opportunities will require flexibility and mobility but some activity markets are more stable than others.
- Health and social life. Is your actual home close to services you will require in the following years? Are you planning to retire soon? If your actual residence does not suit your needs and you can move to another more convenient location, you should take it into account.
- Neighborhood evolution. Are you happy in your neighborhood? Is it changing for good? Are there elements that you are not happy with and you may not tolerate in the future (safety, noise, pollution, lack of green zones, etc.)
Depending what you answered to each question, you might have more information now to decide.
- Children. Do you have any? Are you planning to have? Does your actual residence suit your needs? Are you living near the school you want your children to attend? Are they leaving for college soon? The more important your children are in your family, the more likely your decisions about housing will be influenced by their circumstances.
- Work and finances. Do you have a stable job? What are your perspectives for the near future? Do you see your sector changing in the next few years? Will you be asked to move if promoted? If you get fired, do you have any assets or income to help paying a mortgage? Current job market trends point out the best career opportunities will require flexibility and mobility but some activity markets are more stable than others.
- Health and social life. Is your actual home close to services you will require in the following years? Are you planning to retire soon? If your actual residence does not suit your needs and you can move to another more convenient location, you should take it into account.
- Neighborhood evolution. Are you happy in your neighborhood? Is it changing for good? Are there elements that you are not happy with and you may not tolerate in the future (safety, noise, pollution, lack of green zones, etc.)
Depending what you answered to each question, you might have more information now to decide.
Buy or Rent?
Renting is associated with insecurity or scarcity. "Renters are those who cannot afford buying", you may have heard before. However, renting offers a flexibility that buying does not. The downside of renting is that it increases whereas mortgage payments usually are fixed and easier to pay every year. Once you have answered the previous questions, I suggest you to check this great tool provided by The New York Times - Business to decide if it is better for you to buy or to rent:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0
So what is your answer?
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0
So what is your answer?
a) Ok, I KNOW for sure that I am buying
Congratulations! You are then ready to enjoy the rest of my website.
Please proceed to the "Resources" tab.
Please proceed to the "Resources" tab.
b) It looks that renting is the best option for me
Congratulations to you too! It is good news if you find out that you should not buy, right?
By the way, if you are finally renting, you are invited to browse too, and you can always recommend other people to visit :-)
By the way, if you are finally renting, you are invited to browse too, and you can always recommend other people to visit :-)