The Million Dollar Question: Should I Rent or Buy A House?

How to buy a house? A question that not many people probably know how to answer off the top of their head. And in fact, the thought of trying to figure it out could be really overwhelming. On top of figuring out the whole process, there is also the question of ‘should I rent or buy a house?’, and that’s a question that could, in all reality, cost you thousands if not more to answer. And the most realistic answer? It 100% depends on your circumstances. There are a couple factors that can drive the decision to rent vs buy. And most of them are monetary. Renting is often seen as a more temporary or cheaper option with buying being a significantly larger commitment. Additionally, the rental process is more commonly known and understood, or at least easier to figure out. But how to buy a house? That often is a much more complicated question to answer. So before we begin to discuss how exactly the home buying process work, lets first sort out whether or not someone should decide to buy.

Should I buy or rent a house?

The stress or ‘unknowns’ within the process of buying a home could easily be a factor when someone is trying to decide ‘should I rent or buy a house?’. Which is a valid aspect, if someone finds it too overwhelming to figure out how to buy a house, there are probably going to stick with where they are comfortable- which may just be renting a property. By renting, the tenant avoids many of the responsibilities of the average homeowner. There are several other perks or reasons to look at renting over buying.

For one, if you aren’t sure how long you were going to be at a given location or think it may be more of a short-term living situation, then that’s a really solid reason to rent. A bought home is a commitment, and a commitment that doesn’t have a fast turn-around. For a person who will be moving frequently, or even within the upcoming few years, renting is definitely a better plan than buying. A person could also want to focus on saving up money to buy a house. Saving up enough to have a down payment for a home is a crucial step in the home buying process. So, living in a rented location to save that money is often a good plan.

Other times, people need time to improve their credit score before they can approach a bank for a loan to buy a house. Renting a location and showing those regular payments helps someone accomplish that goal. A good time to revisit that ‘should I rent or buy a house’ question, arrives when you have covered all those previous steps. You aren’t going to be moving around a lot, you have a good credit score, and you have enough saved for a down payment. At that point, it’s probably a good time to switch over and begin looking at buying a house.

With home ownership, every payment you make is a payment towards equity, which is ownership, which is a life-long investment. Owning a home or a property can be great investment— assuming that the home continues to appreciate its value over time. Homes normally do show a good appreciation of value and are therefore generally good ideas. But, that’s also something to look for when buying a home, one has to be sure to buy a home in an area that is an appreciating location, not a deprecating location. You want the home and the home’s location to be worth more money over time, not less.

Now that all the factors have been weighed in the big question of ‘should I rent or buy a house’, it’s time to start looking at the process how to buy a house. The first step is to become prequalified with a good lender, a lender is a bank, credit union or a mortgage broker. This will play an important role in helping with the purchasing process of the home. For the second step, you would want to locate an experienced a realtor, that specializes in first time home buyers, and that operates within the area you’re looking at buying a house in. New home owners do have different needs than people who have purchased a couple homes previously, so it is important to find a realtor who is experienced and able to work with the needs of a new home owner.

Once you have completed those two steps, you would want to begin to keep a close eye on the market. You can do this by using one of the many search tools out there for consumers, like Zillow, Trulia, Realtor.com ect… plus any recommendations your agent may have. You would want to view homes in the price range that you are pre-qualified for and homes that meet the criteria that you have set. After finding the home that meets your needs and that you want to buy, it would be time for you to meet with the realtor and have them put an offer together on your behalf for them to present to the seller. After the realtor negotiates a favorable price on your behalf and you accept the deal, you are now under contract!

After you’re under contract, you need to contact your lender and start the application for the home. The lender will, at that time, order a bank appraisal of the home. An appraisal is a home inspection that the buyer orders and to decide if the house is in good condition. After the whole home inspection, the process will conclude with the buyer either accepting the home in as-is condition or requesting that major issues be corrected before the contract proceeds. This is really the second negation in any sale. The negation on what the seller needs to fox in the home before the buyer is willing to continue with the purchase.

The last step in the pending processes is bank approval and a ‘clear to close’ from the bank. Now, during the pending period a title commitment will be procured either through a title company or an attorney. A title commitment is based on title insurance, which is insurance that makes sure that the property that is being purchased is free and clear of liens or encumbrances prior the buying to selling of the property. So, a title commitment ensures that all debts have been paid off before the property is able to be sold. After the clear to close is given, and the title company has been contacted, they will put together closing documents. Then, all that’s left is to set a date and a time for the buyer and seller to sign and that’s the close! You bought a house!