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Rent or Buy a House?

Buying a home is a major financial commitment, and it can be a great investment as well. Home prices have continued to rise year after year, even in times when the overall economy was not so strong. Rising home prices can be somewhat of a conundrum for those not already in the housing market, however. As prices rise higher and higher, renters may be left wondering if they can really afford to become homeowners. The decision of whether to rent or buy a house is an important one, and it is vital to be sure buying a home is the right move before making the plunge.

Before you decide to buy a home of your own, it is vital that you understand all the expenses involved with home ownership. While the costs of the down payment and the monthly mortgage payments are obvious, there are some other expenses involved with home ownership that you may not have thought of. For one thing, if the heater dies on the coldest night of the year, or if the toilet plugs up, there is no landlord to call. You will have to call a technician or a plumber, and you and only you will be responsible for the cost of the home repairs.

In addition, you will also be responsible for all the monthly utility bills, including the phone, gas, electricity, trash, water, cable TV, etc. Be sure your budget allows for these bills in addition to the monthly mortgage payment.

As a homeowner, you will also be responsible for paying real estate taxes on the assessed value of your home. Be sure you know how much the taxes are before you buy the home. Also take into account that property taxes are likely to rise over time. Be sure to budget extra money to take care of these real estate taxes.

And finally, be sure that your home is adequately insured and that you can afford the insurance payments. Be sure any insurance policy you take out will cover the actual replacement cost of the home, not just its current value.

If you rent a home or apartment, your commitment to the property is limited by the length of the lease. Whether the lease is month to month or a year at a time, your commitment is limited to the time you choose to reside there.

When you choose to buy  a home, however, you are making a 15-year or 30-year commitment to a mortgage loan. You must make sure you are able to make that monthly payment, no matter what your circumstances. Buying a home requires a long term, well thought out commitment of both time and money. Be sure you are ready for this commitment before taking the plunge into home ownership.

Of course, you will never own the property you rent. On the other hand, even if you have a big mortgage, you will build up equity in your home month after month. Instead of paying your landlord's mortgage, you will be paying your own mortgage. This ownership can make home ownership a very attractive option indeed.

Another advantage of home ownership is that your payment can be fixed for the life of the loan. If you choose a fixed rate mortgage, you can be sure that your monthly payment will be the same month after month for the life of the mortgage loan. Compared to your monthly rent payment, which is likely to rise year after year at least as fast as inflation, your monthly mortgage payment will not rise. This can make your monthly mortgage payment more affordable than your rent.

Another popular advantage of buying versus renting is the tax deductibility of mortgage interest. This tax deductible interest can provide the homeowner with a big savings at tax time. Renters typically are not able to deduct any part of their monthly rental payments.

The most important thing to consider when deciding whether to rent or buy a house is your level of commitment and your financial stability. You will need to ensure that you can afford the monthly mortgage payments, plus any home repairs, insurance and taxes. A home of your own can provide both a residence and peace of mind, but it is important to be sure a home is the right choice for you. Don't let yourself be pressured into this important decision. Whether to rent or buy a house is a decision every person must make for him or herself. So, should you rent or buy a house? Find out the answer by using this mortgage calculator and click on 'Rent vs Buy' link.



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