Even if you can afford to buy a house, that doesn’t always mean it’s the right choice to make.
What’s your goal — to make a profit, or to settle down in a place you really like? What’s your credit score? Are you planning to move in the next couple of years? How much cash do you have in the bank? All these factors can affect whether or not you should continue to rent or make the leap and purchase a home.
To help with your decision, we highlighted the key differences between the two options in the chart below:
Skye Gould/Business InsiderA few quick notes on the guidelines presented above:
If you’ve saved up at least 20% of the asking price for a down payment, have a fleshed out emergency fund, and would still be able to put money into savings each month while paying your mortgage, you’re on the right track to become a homeowner.
But remember that non-monetary factors can play a crucial role in the homebuying process as well.
Are you planning any other major life changes in the near future? Consider this: If you can afford mortgage payments of $1,000 a month right now, but you have a baby next year, will you still be able to afford the same amount? If not, it’s time to choose your priorities.
A house is also a big commitment of both your time and money. If someone asks why you want to buy a house and your first answer is something along the lines of “Because I’m wasting money on rent” or “Because it’s a good investment,” you might not be mentally prepared for all the responsibilities that come with home ownership and should consider continuing to rent.
For more insight on whether you should buy or rent, check out this flowchart.