Decision to Buy

Should you Buy or Rent a House?
There is a lot to be said about buying a house rather than renting. Over the years the average USA house price has risen in value, thus providing a tax-free capital gain. However, there have also been times when there has been little growth in house prices. Depending on where you live, the prices can change markedly.

Home ownership has advantages. You feel you have family and personal security because the property is yours and you can touch the 'mortar and bricks'. Even though the bank or lending institution holding the mortgage is the real owner, you still feel it belongs to you.

Repaying the mortgage loan can be seen as a form of compulsory saving because if you didn't have this big debt you would spend your money elsewhere.

Home ownership also has benefits because you can use your house as security when borrowing money. Also, you can do what you please to the house, knowing that a landlord cannot kick you out.

There are also disadvantages, however. It costs a lot of money to buy and run a house and you are liable for big payments, such as mortgages, insurance, rates, maintenance, etc. There is also the disadvantage that if you want to change your circumstances and move elsewhere, it is not a simple matter of packing your bags and leaving.

If you are renting you can get a similar benefit to owning a home by taking money you would spend (after paying your rent) and putting it into a separate account for a home. The beauty of renting is that you are not responsible for costs such as rates, insurance, repairs, etc, which can mount up.

If you decide to move there are no hassles involved in trying to sell your house, which can take months.

You have more control over your situation if you are renting. If you want to go to another city or leave the country, it's just a matter of giving notice and leaving when the notice is up.

There is no real answer, therefore, because it depends on the personal circumstances of each person. Many advisers argue that investing in property is risky, especially if the investment portfolio is not diversified enough to spread the risk. A lot of people do lose on their homes, even though we only hear about those that gain.

It is true that many people lose value in their homes; especially if they are in an area where house prices fall.

Spouse vs. House
You find that she adores the kitchen and he hates the back yard. He may love being close to work, but she thinks they need an extra bedroom. In today's environment, with many regions of the country being hot sellers, agreeing on a house can test a relationship for many people. Compromising and keeping a level head seems to be the only way to go for couples who are house hunting.

Some things you should keep in mind when evaluating a home, so you both agree on what you are looking for:

  1. The neighbourhood: Remember, you are not just buying a house you are deciding on a neighbourhood and a way of life. You will probably end up with children growing up in that area, so these things have to be considered with what's happening in the neighbourhood.

  2. Schools: If you have school age children or children on the way, consider the reputation of the neighbourhood schools. It's really important for the children to get good schooling and sometimes the best schools are a long way from the home you finally choose. Bring this into your calculations.

  3. How does your house compare? Check your house and compare it to other houses in the street. The value of your house will be determined also by the standard of the housing around you.

  4. The layout: Before looking at houses, determine exactly what you are looking for. How many bedrooms? Do you need a home office? Will you need a playroom or family room etc? If the houses you are looking at don't meet your requirements, they should be eliminated from consideration.

  5. The potential: Look at your house as an asset that you will possibly be selling at a later date, or at the very least you will be looking for capital growth. Look at the structural elements and the layout of the house and see how you can improve or change some of the areas to add value.

  6. Your budget: Try and keep within the budget you have set down. If you go above your budget it will bring extra pressures because you need a bigger mortgage, which in turn requires higher payments. Your realtor in the area should help you determine the price range of houses you should be looking at with the budget you have in mind. If you and your spouse see a house that is outside your budget, you should put it aside unless you both agree you can afford more than your original budget.