Lifestyle factors to consider: Own house or rent?

One of the biggest debates in the world of personal finance is whether or not you should buy or rent when it comes to housing.
“There are pros and cons to each side of the debate,”. “What it comes down to, though, is your personal lifestyle and what works for you and your long-term financial goals.”
Proponents of buying a home point to the fact that you have the opportunity to build equity that can serve you well in the long run. When you own a home, you own a large asset that can be useful down the road. Not only that, but there is the potential for appreciation, especially if you live in a desirable real estate market that sees home values increase at a strong annual rate.
On the other hand, supporters of a renting lifestyle point out that most homes aren’t located in areas where you’re going to see an appreciation of 5% to 10% annually. For most real estate markets, the annual appreciation is going to be closer 2% to 3%. On top of that, you have costs including interest paid, maintenance, repairs and property taxes. Many home buyers will be lucky to break even.

The reality is that whether you buy or rent a home should depend on your personal situation and your goals. What’s right for one person might not be right for another. In fact, your preferences might change at different points in your life. As you consider the choice to rent or buy, here are some lifestyle factors to consider:

                             

How long you plan to stay?

“Buying a home essentially ties you down to a location, “If you know that you are going to move around a lot in the next few years, it might make more sense to rent.”
Unless you plan to become a landlord and rent out the property after you leave, buying for a short period is likely to result in losses to your budget. Renting offers more flexibility in living arrangements since you can leave with greater ease, and you don’t have to worry about trying to sell the home before you take off for your next living arrangement.

Convenience

There are a lot of inconveniences that come with owning a home. You handle maintenance and repairs. If you have a yard, you need to take care of it. When you rent, though, many of these items are taken care of by the landlord. You don’t have to worry about maintenance, and if something breaks, it’s someone else’s responsibility.
“Many rental communities, especially if you live in a luxury apartment or condo community, come with conveniences and amenities you might not get if you buy.” Amenities like a workout room, pool, clubhouse and even walking trails might be present in some rental communities. If you like these amenities close to your home so that you don’t have to drive to the gym or if you like the idea of having nearby facilities for gatherings, renting can match your idea of lifestyle convenience.
While some suburban communities have HOAs that provide some amenities, they often cost extra, while access to rental amenities are often included in your monthly payment.

Location and market

You should also consider the location and the real estate market. If your lifestyle preferences are for a big lot and lots of privacy, buying a home outside of a city center might make sense — and be less expensive. However, if you like living near urban amenities, it might be too expensive to buy, and renting might make more sense.
In some markets, the cost of buying comes with a lower monthly price tag than renting. In these markets, even if you prefer to rent, you might be better off buying. If renting is much cheaper on a monthly basis, though, that could be the right choice for now. You can invest or save the difference in cost and later when circumstances are different, you might be able to change your approach.
“No matter your preferences, it might be worth it to rent for six months or a year before deciding, especially if you are in a new area,”  “This allows you to get a feel for the location and get to know what you like or don’t like about it. You don’t want to be in a position where you buy in a new area, and then end up leaving less than a year later — and are stuck with this house to unload.”

Risks

Finally, don’t forget to weigh the risks associated with buying and renting. “With buying, you run the risk of ending up needing to sell even if the market drops,”  “Even homes lose value, and you could be out tens of thousands of dollars.”
However, there are risks associated with renting as well. Landlords can increase rents to the point where you are priced out of your housing, and you are forced to move. You also don’t build equity. Unless you are investing (and that comes with its own risks) to increase your net worth without the help of a home, you could wind up in financial trouble down the road.
Carefully think about your financial situation, and make a decision to buy or rent based on what is likely to work best for you and match your lifestyle.

For any credit related information or advises, visit: www.cibilconsultants.com
Source: Secondary

The right time to buy a house

If you’ve been considering buying a house but you’re still unsure, consider some of the personal and economic conditions that favor home purchases. If you find that a number of these signs ring true for you, it might be time to contact a real estate agent and start shopping.

Funds for down payment
Having a hefty down payment helps in the same way as finding a low interest rate. Ultimately, the less you owe, the less you’ll have to repay and the less you’ll have to tack on for interest. If you find yourself with a nice lump of cash, putting it toward a home purchase is definitely a solid financial investment. Just think, you’ll be building equity in your home which you’ll see again when you sell, and you’ll have somewhere to live in the meantime.

You’re ready to commit
Home ownership comes with a plethora of responsibilities, including home maintenance, property taxes and the process of selling the property when it comes time to move.

Legal fees, moving expenses, and all incidental costs associated with buying a home can really add up. To make the most of these costs, it’s best to plan on living in your new home for a stretch of time. Consider whether you have a stable job that will provide a solid income for a mortgage, and if there’s any chance you’ll have to relocate in the near future. If you feel you can commit to sticking with a home for at least five years, then it might be just the right time for you to buy.

Owning costs less than renting
If you’ve examined your  budget and realized that your monthly payments associated with buying a home are less than you’re currently paying in rent, it’s time to consider a home purchase. Talk to your bank and look at what your mortgage payments would be for a variety of different properties and gauge what you can afford. Factor in any additional costs you may have to pay, such as condominium fees or extra utility bills, and compare your total costs to what you’re paying in rent.

Buyer’s market
When demand for housing is low and there’s a wealth of properties on the market that aren’t moving too fast, that’s known as a buyer’s market. You’ll have a lot more bargaining power under these conditions than if you’re buying in a seller’s market, which is when demand for homes is high, resulting in few properties on the market that are selling fast. In a buyer’s market, chances are you’ll be able to negotiate a seller’s list price down – sometimes quite substantially – and save yourself a lot of money in the process.

Low interest rates
When interest rates are low, it’s a great time to look at buying a home. You will be able to get a reasonable interest rate on your mortgage loan, which can save you a lot of money in the long run. A home is generally the single largest purchase anyone makes, and the amount of interest tacked onto a mortgage really adds up over the years that you’re repaying the loan. Even a difference of a fraction of a percentage point can make a pretty big difference over the long term.
Visit- www.cibilconsultants.com
Source: Secondary

Debts can destroy your credit score !

There are some differences in how the different types of debts affect your credit score. let us understand how :

Mortgages
Value of your house less than the mortgage value? Your credit score won’t be affected as long as you keep up with the payments. Your credit report won’t have the value of your house listed on the report, so value of your house being lower than the mortgage value won’t be an issue. Excellent credit can be still maintained even if you are financing home with hefty loans, provided that you make payments on time. But if you are having multiple mortgages with pending balances, then they are likely to impact your score.

Auto Loans
Your payment history is more important than the amount you owe on your auto loans. If you have a habit of buying too many cars or have multiple auto loans with pending balances on your CIBIL report then your credit scores can be impacted. But even then your payment history will have more importance than the amount of debt virtually at all times.

Credit cards
These loans are revolving accounts, not like installment accounts. Hence, they are treated differently to some extent from the ones mentioned above. While the number of revolving accounts you have with unpaid balances and the amount you owe are taken into consideration, the available credit you use is the most important factor. The credit score will have a look at your limits and then compare then to your current balances as reported by your lenders. This ratio is known as your 
credit utilization ratio.

To manage your debts and improving your credit score just consult credit specialists at www.cibilconsultants.com

Source: Secondary

Can you get house on rent if you have bad credit score ?

Nowadays, many people face the problem of bad credit. And with bad credit comes several problems from getting a job to financial transactions, to renting a home rather than buying a house. Credit score is not just looked at when you go for buying a loan but also when you go out to rent a house. But unlike when you go for buying a house, renting a house with bad credit is still manageable, if you know what you are up against.

For getting qualified to rent a house, you need to prove to the owner that your bad credit in no way would disqualify you as a bad tenant. So make sure that you prepare your credit before applying for renting a house.

Be prepared beforehand:
Try to clear up your credit as much as you can. Try to give the lender as much documentation you can to show you are now trying to improve your credit score. Try to establish a record of regular bill payments.

In the market for a long time:
Try to search for a house which has been in the market for a long time. These properties are usually in low demand for them being not in good localities or they are in need of renovation. Such low demand properties have less strict terms for renting and you can lend them easily.

Be honest about your bad credit status:
Naturally, we think that our bad credit won’t let us get accepted for the tenancy but there is no point in hiding your financial past for this, it would only backfire. If, later, the owner finds out about your bad credit, he may look at you like you are a risk since you are hiding stuff. Be honest to the owner that you have a bad credit but try to make him believe that you are now changing and striving to improve your credit score.

Large Deposit:
Always save beforehand for a large deposit. Since you have a bad credit, the lender might see you as a lender’s risk and ask for a hefty deposit. If not, you can use the same amount to make him take the decision in your favour. You can also use this deposit as a few months advance rent.

Research & Reference:
Search for an owner who doesn't run a credit score check. You’ll usually find such landlords in local classifieds as they are private and not big management companies. Get references from your previous landowners who could write good feedback about you and then you credit score won’t matter much. If the present owner sees good feedback about the duration of you stay, your payment record, then it would add value to your rent application despite the bad credit.

Source: Secondary