There's an old saying, "Rent when you have to, buy when you can." And it still rings true.
Renting is ideal for young people right out of college, who are just starting out and don't have savings or an established credit history. It's also a good solution for people who move frequently for their career. With a short-term or month-to-month lease, they aren't committed anywhere. There are also more flexible credit requirements and less paperwork involved in renting than in buying a home.
On the other hand, buying a home requires lots of paperwork, savings for a down payment, and a good credit score – not to mention a commitment to the house and its location. But, owning a home is an investment. And the equity that you build in the home over time becomes cash you can access when you sell your home or open a home equity loan or line of credit. And that's something you will never have as a renter.
Having a good credit score, savings for a down payment, and good income are key to being approved for a mortgage. So if you're interested in owning your own home at some point in time, start building your credit score, savings and income now. Then, you'll be in a good position to take advantage of a home buying opportunity when it presents itself.
Making the decision to rent or to buy varies with each person and their situation. It always helps to talk to a professional – like your local Rabobanker. We're always here to help.
The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.