- Factors like financial instability, professional changes, and plans to move to another city or country may indicate a more favorable time for rent.
- With a rented house, it is easier to change plans if it is necessary.
- The economic conditions of the city, state or country where we live can directly interfere with the housing situation.
This is one of the main dilemmas of financial life. Learn which factors you must consider when deciding.
Taking care of finances is fundamental for a happy and satisfactory life. Paying bills, saving money and being able to buy things we want is important to find happiness — that is what a study by the Economics Nobel Prize winners, Angus Deaton and Daniel Kahneman, indicates.
In this aspect of life, one of the biggest decisions to make is regarding the property where we live. Buying or renting a house is a difficult decision — one that must be analyzed according to solid factors. This is because a negligent choice can put the buyer in financial trouble or generate future regrets.
Are you buying an apartment in cash? Acquiring a construction loan? Searching for a house to rent? It all depends on factors like your life at the moment, the economic conditions, and others. Know what to consider when deciding between buying or renting a property down below.
Main criteria to consider
There are some conditions to analyze before choosing. Some of them are individual, such as your financial condition and your life at the moment, while others are subject to the social context, just as the economic conditions.
Life at the moment
This is the first criteria to consider if you are thinking about buying or renting a house. Factors like financial instability, professional changes, and plans to move to another city or country may indicate a more favorable time for rent. With a rented house, it is easier to change plans if it is necessary.
On the other hand, if you have already found some financial stability, intend to stay in the same city for some years, think about having children or have just become a mother or a father, assuming the compromise to buy a house may be a good choice. The property is a guarantee to the future and can be sold if circumstances require.
As a specific topic of the moment of life, the financial situation must be considered carefully to avoid financial problems in the future. It is necessary to analyze the financial reserve, the monthly income, the possibilities of future income variation, etc.
One of the comparisons is between the price of a financing entry and the amount that would be spent on rent. If the rent amount is too low, for example, it may be interesting to pay it and save the rest in a financial reserve, to be used in the financing entry.
Inflation, interest rates, and political instability: all these factors must be considered before choosing between renting or buying a house. The economic conditions of the city, state or country where we live can directly interfere with the housing situation.
If the conditions are unstable, the interest rates are high and increasing, and the political guidelines indicate economic ups and downs, it might be interesting to avoid the compromise of buying a house.
Intentions for the property
This factor is related to the purpose that will be given to the property. It can be used for habitation, rent for passive income generation, or construction of patrimony — this is important if you decide to buy a house.
If the purpose is to live in the house, it is important to consider the factors mentioned before. But if the objective is to have income with the property, you must analyze the real estate market, the cost of maintenance, and the fluctuation of the rent price. Depending on these factors, it might be interesting to invest this amount in a fund.
When each option is worth
Some criteria are explicit about whether it is worth buying or renting a property. Know when it is more appropriate to buy or rent next.
It is more interesting to buy a house, for example, when:
- You have enough money saved for the down payment, and you can ease the interest on the loan;
- The interest rates are low, and the economic moment is favorable;
- You have access to housing programs with advantageous conditions;
- The financing portion does not exceed 30% of your income.
On the other hand, renting may be a better choice when:
- You still do not have enough money to give 20% of entry;
- The interest is high, and the financing portion is more expensive than rent;
- It is more worthwhile to pay cheaper rent and invest money to buy a property in the future.
Featured image is Pixabay.