Should you BUY or RENT a house?

The purchase of your first home is a very exciting decision, but it can also be a daunting one. Many people are not sure if they should take the dive into homeownership or if renting for the foreseeable future is the better option. The answer? It depends. Some of the pros of renting a home to live in are the lack of maintenance costs (thanks Mr. Landlord), freedom to move around, lack of those pesky closing costs, and no unforeseen large capital expenditures to keep a house up and running (think new roof). The downside is that all that rent money is not building you any equity, and equity is how you create wealth in life. You're also not in control of the rent, and it could go up continuously over time. And what if the landlord wants to stop renting to you? Basically, you are sacrificing capital appreciation and control of your space, for lack of maintenance costs and flexibility. If you are someone on the move, and still unsure of where you will settle, renting may be the best option. Also, if you don't have enough money saved to put at least 10% down on your house (while 20% is recommended), continuing to save is probably your best bet. There are always unexpected homeowner costs that pop up when you least expect it, and when you own a home that falls under your obligation, so always be prepared with some emergency funds when making the jump to homeownership. At the end of the day, if you have the down payment and the liquidity to support owning, there's no better way to create wealth for the average person (plus there's nothing like having a place of your own!). If you are unsure about renting vs. owning, consult a financial professional for help.

-Your Friends at Red Oak Financial Group