When you rent, you help your landlord pay down his or her mortgage. That may make you think that buying is a better option - but is it really? To decide which option is right for you, you need to ask yourself four questions:
1) What is my current lifestyle and job situation? You are a better candidate for buying if you have a stable job that does not require you to travel or relocate too often. This will make it easier for you to qualify for a mortgage and will ensure that you don't have to pay extra to have your home looked after while you are away.
2) What are my finances like? Homes do require a larger output of money initially. You need to pay a downpayment, a mortgage, insurance, utilities, and other costs. At the same time, banks often do make special first-time-buyer. Do the research to find out how much you need and whether you like the home you can afford. Only buy when you have the savings to do so.
3) What are my long term financial and life goals? Buying a home gives you an asset and equity. This can help you in the future, since you can always sell your home or borrow against your equity in an emergency. Homes can also mean tax breaks for you. Consider how equity and tax savings can help you reach your retirement plans. If you decide that the cost of owning a home is not worth the financial payoff, be sure to at least start putting money aside into some sort of retirement investment - today. If you decide not to buy, you will need a larger nest egg in order to continue renting in your golden years.
4) What is my personality like? Would you be happy with a home and with the work it requires or would you become restless? Buying a home is a long-term investment - you may lose money if you decide to resell a home you have just purchased.
In short, renting requires less responsibility while buying requires you to adopt some stability in your life. Whatever you do decide, keep in mind that your decisions are not forever. If you decide that renting is right for right now, you still leave the possibility of buying open. If you opt to buy, you can still always return to renting. Just think ahead somewhat so that you choose the decision that makes the most sense for you in the short and long run.
