Relocating to a new city comes with many decisions that have to be made. One of the biggest decisions you’ll have to make when relocating is whether to rent or buy. Most people who are relocating get torn between these two options because each one of them comes with its own pros and cons. Buying can make sense if you’re confident you’ll stay in your home for more than five years. Your decision regarding whether to buy or rent when relocating to a new city boils down to a range of factors including personal finances, how long you plan to live there, career goals, lifestyle considerations, and more.
So should you rent or buy? Here are some of the things you'll need to consider:
Consider The Costs Of Renting Vs Buying
Renting may come with costs such as renters insurance, utility bills, groundskeeping, rent deposits, security deposits, postal services, and more. On the other hand, buying comes with many costs that you need to be aware of before making a decision. Most homebuyers do not understand the true cost of homeownership, so they end up encountering many unexpected costs. You should be aware of sneaky expenses such as title fees, loan processing fees, insurance costs, property taxes, and lawyers’ fees. These costs can add up quickly and disrupt your budget. It’s advisable to compare the costs of renting vs buying and find out the ideal option for you.
Assess Your Financial Situation
Can you afford to put down a 20% down payment in case you want to buy a home? Do you earn enough to pay all the other costs that come with buying a home? Does buying a home put a strain on your finances? These questions will help you determine whether you’re ready to buy a home. Ensure you’ve saved enough for the down payment and other costs. You can seek advice from a mortgage advisor to determine whether you can afford to buy or rent.
What Are The Risks Associated With Renting And Buying?
If you don't have a stable income or you're unsure about your finances in the future, you risk foreclosure in case you default on your monthly payments. Loss of income or unexpected increases in expenses can disrupt your finances putting you in a risky situation. Another risk that comes with buying a home is the possible downturn in the real estate market. If real estate prices decline and it happens that you want to sell your home, you are most likely to sell your home at a loss. Besides, if you’re more likely to move to another location, buying may not be ideal.
Renting also has its fair share of risks. Your rent could increase after your lease agreement expires and renting doesn't give you the opportunity to build equity.
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