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By Judy Willard
Both renting and buying a house can have benefits for different types of women. For this reason, it is essential to consider which one is right for you.
When you consider the benefits of owning, you might think about the great investment you are making, and how future you will respond to these benefits. When you consider the benefits of renting, you might think about saving money, and how you can build your credit off of it for future large purchases.
In the end, the decision to rent or own should be based on several different factors. If you are not sure about the investment of owning versus the credit-building powers of renting, check out these four questions you should ask yourself.
#1) What Is Your Current Living Situation?
If you are currently renting, you know that there are some heavy drawbacks to making monthly payments on something you will ultimately leave behind when you are finished. However, it is important to consider how much money you are spending on rent in comparison to how much you make in a month.
When you are spending more than 50% of your income on rent, you are in a situation that can lead to a stuck feeling, as it becomes more and more difficult to save money. If this is the case for you, you should consider looking for a different location (whether you choose to rent or own it).
Additionally, it is important to understand how much space you need to live comfortably. Do you have children? Are they of the ages where sharing a room is more detrimental to them than having their own space? After you consider these questions, you may realize that you need either a larger apartment or a house. Moreover, if you realize that you have too much space, consider downsizing to help you save money.
#2) What Is Your Current Financial Situation?
Are you unsure of the answer to this question? Well, it is time for you to go to your bank. If you have an account there, you can simply ask them for your credit score, and discuss your financial options.
In most cases, your banker will come back with a print up of your credit report, and discuss how large of a loan you will be able to take out should you decide to go the route of owning.
When you do get this information, it is important to understand how your credit score affects your interest rate. If the interest rate is too high based on your current financial situation, you should consider renting for a few more years, and making different purchases to help you boost your credit and lower those interest rates.
#3) How Comfortable Are You With Your Job Security?
It is important to consider where your job is going, and how it is working for you. If you are in a position that is in danger of being laid off or completely redesigned, it might be scary to purchase a home.
Are you comfortable in your current position? Are you making enough money to help you meet your goals? After considering these questions, account for the goals and plans for the company.
You can always ask a manager where the company is going, and if it will expand. Remember that expansion is a good thing. Though this may bring changes to your everyday work experience, it can help you gauge the job security in the company.
Moreover, you can ask your employer where you stand in the company. Is your job at stake? How can you ensure that you will have a job in the next five years? These aren’t very common questions that employers hear; however, when you ask them, your employers will see you as a go-getter type who wants to succeed based on the company’s goals (which is an added bonus).
If you are in an unstable company (not always a bad thing) or position, and you don’t have a backup plan, you should definitely consider renting over owning, because you definitely don’t want to lose your job with $150,000 worth of debt over your head.
#4) What Is Your 5-Year Plan?
It is essential to consider where you will be in five years when you make the decision to rent or own. Even if you have a stable work position, and you are comfortable with your financial position, it is imperative that you consider your own goals.
Are you looking for another line of work? Are you hoping to be out of your current position within the next five years? Are you working in a place that doesn’t fulfill your goals? When you consider the answers to these questions, it is important to understand your past as well. If you are the type of woman who likes a change of scenery, you might consider avoiding owning a home right away.
If your goals go beyond your current place of employment and your current living situation, you may find it prudent to rent until you reach those goals. While you are looking for other lines of work, you may realize that you have to relocate to actually meet your five-year goals. For this reason, it could be more of a hassle to own a house rather than rent.
On the other hand, if you are in a position where your five-year plan is going to keep you in your current area, investing in a home will help you grow roots and keep your goals focused.
In the end, owning a home is a better investment. However, if your current financial situation is keeping your interest rates too high, you will find that renting and focusing on your credit score is a much better investment. Consider the questions above as you consider making the leap from renting to owning. Do you prefer renting or owning? Share your thoughts with us in the comments below!