Should Newlyweds Buy or Rent A Home?
The wedding month is upon us. It’s when a lot of couples exchange vows, cut the cake, and dance for the first time as one. But after the event, the inevitable question looms, “Should they rent or buy their first home together?” It’s expected for couples to follow the standard plan of buying a house and starting a family after getting hitched but newlyweds must make the best decisions for them and not cave in to family and peer pressure.
Choosing whether to rent or buy is an important decision that needs to be made together. The choice is usually impacted by some major lifestyle factors. It’s best that newlyweds give great consideration on these factors and don’t jump directly from the altar to the new home threshold.
Here are some factors to consider on whether newlyweds should rent or buy a home:
Your plan in the next five years
The general rule when buying a home is that you want to be sure you’ll be in the same location for at least five years. Otherwise, you’re probably going to take a hit financially. A home is usually not a good short-term investment because the transaction costs are too high. So if you own a home for only a short time, you might end up paying more to sell it than you have gained. But for newlyweds who prefer to rent, they can take the money they save by renting and invest it somewhere else. Since the average renter can save thousands of pesos every month, they can afford to invest in stocks, bonds or even vehicles that have a better rate of return or if their savings is big enough, make a down payment on a home.
Starting a family in the near future
You’ll need more space if you immediately plan to have kids. Thinking long-term before buying a place that you could soon outgrow is crucial. You don’t want to have to be upsizing from the house or condo you just bought. You will lose money. If you think you’ll be outgrowing that starter home within the next 4 to 5 years, you need to either buy accordingly or hold off on making a purchase.
Your credit condition
Talk with your partner about your credit status and getting recent credit reports. By doing this, you should know where you both stand in terms of credit scores and debt. Home ownership provides attractive tax benefits. People who take out mortgage loans to buy homes can deduct the points paid to obtain a mortgage when they bought their home and they also may deduct mortgage interest payments and property taxes each year.
Money for down payment
Make sure you’ve built up a significant savings or else you may need to wait until your bank balance is higher.
Think into account your growing careers
You should both consider situations that may force you to move to a new city or territory such as a promotion or for a stronger job market. If you believe these things may happen, then buying a home might not be right for you.
Uncertain job security
Don’t jump quickly into home ownership if your company is potentially downsizing or laying people off in the near future and if your or your spouse’s job’s future is not secure. Remember that most lenders will want to see consistency in your professional history. This is not the time to switch industries or decide to start your own company. You’ll likely have to show that you’ve been in the same job—in the same industry—for at least a couple of years.
Being financially drained is not how newlyweds want to start off. Caving in to the pressure of what society dictates newlyweds should do is never a smart move. The option of renting maybe the quick and stress-free solution for you as you save up and purchase that dream home but if you’re financially set and ready to face a greater degree of responsibility, then buying a home (at reasonable price) is for you. greater degree of responsibility
If you’re newlyweds and you’re looking for a new place, contact us now and we’ll help you meet your new home.