Agonizing over whether to rent or buy?

rent or buy Housing Prices Heat Map — San Francisco vs. Baltimore (Photo credit: kentbye)

Agonizing over whether to rent or buy?

It’s a big decision for sure.  Whether to rent or buy is probably the biggest financial decision most people will ever make.  For some owning a home is proof that they are a real grown up.  Beyond the emotional factors there are hard headed financial realities to consider.

Let’s examine some key considerations

The biggest factor to consider when deciding whether to rent or buy is how long you realistically intend to stay in the area. If it’s at least 5 years you may want to consider buying. Less than that and the expenses of closing may cancel out other factors since nobody really expects appreciating home values to bail them out of a bad decision any more.

Location, location and location

Local price to rent ratios must be considered. Historically cities like Miami and Detroit don’t take much time living in a property to make home ownership worth it while cities like San Francisco and New York favor renters.

There are tools available at to help you figure the price-to-rent ratio. For example if the price of a home is $250,000 and the monthly rent for a similar home is $1,000 or $12,000 annually, the price-to-rent ratio is about 21. Generally, if the ratio is above 20, the scales tip toward renting, especially if there are factors that could cause you to have to move sooner. If the ratio is below 15 home ownership starts to become more attractive.

It’s more than the money

The tug of home ownership is very strong in many people.  Others find it not so alluring.  True it can be restrictive and certainly ties a person down.  Then of course there are the chores. The roof needs fixing and the furnace doesn’t sound too healthy and…

Ultimately it is a quality of life issue, one of the most personal decisions that anyone has to make. Buyers can typically afford a home about two-and-a-half times their annual income.

plans for children or schools and stability for young children are often a deciding factor in buying a home.
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After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

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