Every time, before you make the decision to start a property search and buy a new home, you have to make the decision on whether or not you want to buy or rent. This is often a much more difficult decision than saying, “I’m going to buy a house!” Well that would be great, most people have to spend more time debating the pros and cons of each to decide which is the best option for them at the present moment. Many factors going into the decision between renting and starting a property search for buying. Today on the blog, we’ll discuss some of these determining factors and what that may mean for your own housing situation.
One of the biggest obstacles that many younger individuals face in the path to homeownership, whether in Santa Fe or another local, is finding the money for a down payment. In a previous blog, we noted that it’s exceptionally important not to take money out of your savings for a down payment and that they should be two different sums of money. Not having a sufficient down payment for the purchasing process and additionally, having money for other expenses like the inspection and escrow, can also be challenging. Renting is the only option if you are not able to come up with an appropriate down payment in order to secure a home loan.
Your credit score can, unfortunately, be a major determining factor if you’re able to begin a property search or if you have to rent. Either way, your credit score affects both of these processes. Having a sub-par or poor credit score will make it impossible to secure a home loan, let alone a home loan with a good interest rate. In the same respect, you may end up in some shady rentals for the same reasons. It’s important to put time and effort into keeping your credit score up for both your home property search and for your rental potential.
Long Term Plans
Knowing what your long term plans are for both your living situation and work is important in your decision to buy a home. A home can actually be a negative investment if you only live in it for a year or two before selling. In fact, most real estate agents recommend being able to live in a home for at least five years before moving on. If you are unable to make that kind of commitment, whether due to finances, work, or other factors, then renting is probably your best bet. There is the option to buy a home, live in it for a year or two, and then rent it out, do don’t forget that is a possibility.
Having furry friends can easily be a determining factor in not just your property search, but also your living situation in general. When searching for apartments you may be turned away simply because you own a cat or your dog is over 20 pounds. In the same respect, when you are on a homesearch with pets, you have to keep in mind that you will need fenced yards and to be away from busy roads. If you have dogs or cats and can afford a house, it’s probably the best situation and option overall.
Other Expenses and Investments
Sometimes individuals will opt in other financial investments over purchasing a home. There is risk involved in purchasing a home and for the investment to pay off, you have to wait quite a long time. In the same respect, investing in the housing market is a relatively stable investment when you look at the many different types of investments available. This point on whether it’s better to rent or to buy is a coin toss depending on where you opt to spend your money and what your long-term goals are. Perhaps many of the previous factors will come into play before you have to figure out where to invest your money.
When you’re ready to start your property search, turn to Berkshire Hathaway HomeServices in Santa Fe for help from a professional real estate agent. We can help you find the home of your dreams and work through the process together. Call our local Santa Fe office today for more information!