A lot of people make the mistake of simply comparing the cost of a rent payment to the cost of a mortgage payment, when considering whether they should continue renting or purchase a home. There are several other things that need to be taken into consideration when comparing these two options.
The first thing to remember is that in addition to the mortgage payment on the house, you will need to pay house insurance and property taxes. These costs will vary depending on the value of the house and the location of the house. You will also need to make a down payment and pay closing costs when purchasing a home. Cost of utilities paid in each of the different scenarios need to be considered in the comparison also. When looking at homes to purchase, it is always wise to ask for statements that show the costs of utilities for the previous year.
Another difference between renting and owning a home is the time and costs of maintenance, in and outside of the home. Are there areas of the home that will need replacing in the near future, such as roofing, exterior finishes or floor cover? What ongoing maintenance will be involved in the home: water softener salt, lawn care, snow removal, exterior painting, staining or cleaning? Are you prepared to make those commitments of time and funds?
Each individual needs to carefully consider their own financial situation, and weigh ALL the costs involved when making this kind of decision.
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