Thursday, June 28, 2012

Deciding whether to rent or buy


When moving - whether for a new job, a change of scenery or family reasons - deciding on a new home is often a difficult task. What type of neighborhood is right? How big should it be? What household movers should be used in the relocation process? Of course, at the bottom of this, there is an even more fundamental argument: to rent or to buy.
Due to difficult-to-grasp factors such as personal finances, the state of the housing market and the economy's overall health, it is not surprising that many people who are moving out of state don't know how to start making this decision.
However, by keeping a few things in mind, this process can become much clearer. Here are a few ways of approaching the problem.
Know your credit score
Your credit can have a huge impact on your options for finding the right home. If you are hoping to buy, a low score can result in much higher rates from your mortgage. For example, someone with a credit score of 620 would likely pay an extra two percentage points compared to a borrower with a score of 760, according to the American Bankers Association.
The community
Being able to predict the future of a neighborhood can help you decide if buying a home is a good investment. A location that is on the upswing is likely to witness a comparable rise in rents, meaning you'd likely have to pay more the next year, or hire van lines in order to move again.
Conversely, a neighborhood that is becoming more desirable will likely make your home more valuable the longer you stay there - therefore earning you money back on your investment.
"If you buy a good property in a stable community with today's bargain prices and interest rates, it is virtually guaranteed that value will rise by more than that," Karen Eastman Bigos, head of Towne Realty Group, told The New York Times.
Maintenance and taxes
Although it is easier to make monthly payments for a house you own, knowing that it is an investment, there are often many hidden costs to owning a home. Maintenance costs and property taxes are examples of how a home could cost significantly more than renting, at least in the short-run.
It is important to evaluate the property in order to gauge these costs. If the property is worth a lot, you will be paying high taxes on it. Conversely, if the house is in rough shape, you will likely be investing a lot of money into repairs and upkeep. Renting to avoid these costs might be wise in such circumstances.

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