If you are considering buying a home, then you should know some things about preparing yourself for the differences between buying that house now or waiting a while by renting that home or leasing it. There are many reasons why you should rent a home as well as many reasons why you shouldn’t. The main thing that you need to recognize is the nature of your situation and how special that situation really is. You must determine if you are ready to buy a home right now, or if you need to rent a little longer to get the funds together in order for you to really take advantage of the leverage of however much you have to put down on a home. What we will focus on here is five main reasons to rent before you buy a home.
5 Reasons To Rent Before Buying a Home
The first reason why you should lease or rent a home is to save money. The best method for saving a great amount of money to put towards your home is a lease option. A lease option is when you sign a lease with the option to purchase the home at any point and time you feel you are ready to purchase. For example, if you sign a lease option on a home for two years and you decide to go ahead and purchase the home, then you can simply use the rents (rent credits) towards the down payment of a mortgage or towards the home, before the end of the term. You can also opt out of the contract before the end of the term because you have that option to do so. That is why it is called a lease option. This method is one of the best options to take advantage of because you have more to work with and you are not fully obligated to anything because you strictly have decisions to make based on the conditions of your situation.
The other reason why you want to rent before you buy a home is to make sure that you prepare yourself and your credit so that you can have the best deal possible from a mortgage company as well as with the down payment of your loan. This is arguably one of the most important parts of buying a home because you can get great benefits from taking out a loan, such as low or no down payment. In this case, renting is great for you because you can use you paying your rent consistently to support the building of your credit. Renting can help build your credit significantly, putting you in better shape to purchase your home. Ultimately, your credit is going to help determine how much you will be able to pay monthly payments to your mortgage or how many benefits you will be able to take advantage of in the midst of you getting a mortgage.
The third reason why you should rent before buying a home is to determine if that is even the best situation for your family at this very moment and time. Understanding the financial condition of your household will help determine how long you should be renting or how soon you can buy your home. If you buy your home too early, before realizing that you are not going to be able to make the monthly payments on a mortgage or that the home is not a good fit for you, you will ultimately regret buying that home in the first place. This is why you need to determine if buying a home a certain time is right for you. Sometimes it’s not about you buying a home as soon as possible. Many times you have to know the nature of your financial situation and your family situation so that you don’t make the wrong decision based on bad timing.
The fourth reason why you may want to rent before buying is if you are a young newlywed couple or if you have just moved in a new city or town you have no idea how to navigate. This is a quiet reason why because it is not considered on a regular basis. If a newlywed is trying to start their lives, then they may want to get themselves acquainted to one another financially and have a plan of action when getting ready to make that transition to buying a home. Since a married couple has combined income, they can save money faster for a home if they plan it right. Renting first could be the best thing for a family especially a young family. Hypothetically, if a young family buys a home too early, without a plan, then they can risk getting into a mortgage or a situation with the home that can bite them back in the future because of lack of awareness.
The fifth and final reason why someone would want to rent before buying a home is because a person may have just been hired by an employer. This is a significant reason because they can rent for a couple of years to be sure that they have been employed enough to get themselves an opportunity to get a mortgage to be able to purchase a home. This also gives them some time to get comfortable with the job. Some people may take it upon themselves to change their minds about working somewhere and decide to quit, without any hesitation or without thought. At lease if you are renting, you can work out the terms of your agreement, or just simply move without trying to go through the hassle of selling the property, getting a loan modification or any other hassles that you may be stuck with if you purchase a home. Not to mention all of the charges for services that help cope with the changes of employment or financial situation.
Ultimately, you will need to discover what category you fall under in terms of finding out if purchasing a home is best thing for you or if buying a home is the best thing for you and your family.