Life can move so fast that we often don't have time to think about important things. One of these choices is whether to rent or buy a house.
The Choice to Buy or Rent a Home
Renting or buying is one of the most important choices people have to make. Choosing between the two is really a very hard thing to do. But I once had an economics teacher who put it in a way that really helped me see the big picture. "Rent when you have to, buy when you can" was his motto. This can't be further from the truth, and here's why.
Some people can benefit a lot from renting. People who are always on the go, people whose jobs move them and need to stay mobile, and people who just moved out of their parents' house but don't have much money or credit. In any of these situations, renting is the best option. People who need to be able to move around can do so when they rent. They live month to month and don't have any plans. Also, renting requires very little paperwork compared to buying and selling. Also, people with little money and bad credit should think about renting. If you have a low credit score, it will be hard to get a mortgage, and even if you do, the interest rates will be too high, and you might not even be able to make the monthly payments.
But when you can, buying is much better than renting by a long shot. Sure, you have to fill out a lot of paperwork and make a long-term commitment to the house you buy. But owning a home is very important in the long run because it is one of the biggest investments you can make. Home equity is the key to this. Equity is a measure of how much the home is worth. This equity almost always goes up over time, and sometimes it goes up very quickly, like when the prices of homes in California went up recently. The price of the house goes up a lot because of these huge spikes, and the people who own the house always have a lot of money right under their feet. Homeowners can also get home equity loans, which are based on how much their homes are worth and usually have reasonable interest rates.
Of course, all of this depends on how much money you have. It's very important to have a good credit score, a good amount of money saved, and a good income. If a person has a good credit score, they can get mortgages with lower interest rates. If they have a good amount of savings, they can make a bigger down payment, and if they have a good income, they can make the payments. When this is possible, you should definitely buy. There are some good things about renting, but buying is always better.
