If you think you’ll be living in the same city for more than 5 or 6 years, is it always better to buy a house? What are the pros and cons of buying vs renting? Is it usually cheaper to buy, and how?

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Posted by Anne Stillwagon (MONEY FORUMS: 4, Answers: 3)
Asked on March 13, 2016 12:11 pm
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There is no single answer to this question. There are many variables, including the local housing market, your financial situation, your family situation, your employment situation, your life goals, your financial goals, and your personal desires.

Five to six years is often considered to be the “break-even” point, at which you might cover the costs of buying and selling through reduced housing costs or gained value. However, this fails to account for market fluctuations, the costs of ownership, possible changes to income or family situation that require a move, or the many other factors that contribute to the overall cost of owning a home.

There are many pros and cons to buying or renting. Buying is great when the price of buying a house is much lower than comparable rental costs, when you have a family that you don’t want to uproot, or if you have pets that make it difficult to find a rental. Renting is great when the cost of renting is lower than the cost of comparable buying, when you don’t know how long you will be in a particular area, if your employment situation is unstable, if you anticipate changes to your family, or if you enjoy the flexibility of not being tied to a house.

Whether it is cheaper to rent or buy is very market specific. Keep in mind that one advantage of renting is that the rent amount is set, regardless of what happens to the property itself. When you own your home, you are responsible for the mortgage payment plus all repairs, maintenance and upkeep. Those costs could add 20-40% to the total cost of housing.

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Posted by Kate Horrell (MONEY FORUMS: 0, Answers: 4)
Answered: March 13, 2016 7:16 pm
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It is not always better to buy than to rent even if you’ll be in the same city for a decade or more. A lot of it depends on the rent to buy ratio in your city, your abiity to qualify for excellent financing terms, and what better things you could do with your money.

A lot of people become house poor meaning they stretch themselves to get in a house only to find that the payments and the maintenance eat up any potential savings that they have.

The real rule of thumb when it comes to real estate is to use your head first, and then listen to your heart.

I’m linking to one of the best pieces that helps shed light on how to do the math on rent v. buy.

http://affordanything.com/2015/11/24/is-renting-better-than-buying-should-i-rent-or-buy/

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Posted by Hannah Rounds (MONEY FORUMS: 1, Answers: 54)
Answered: March 13, 2016 2:20 pm
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