It’s been a long-held belief that it is more financially wise to purchase a home rather than to rent, if you can afford it. But the last two years have proved that assumption wrong and people are now faced with more difficult decisions than ever in the real estate market.

 

While the super-low interest rates and plummeting housing prices seem to make a great case for buying a home, more and more consumers are looking to rent or rent-to-buy opportunities. However, making the right choice can be difficult.

 

So, generally speaking, when does it make sense to rent, and when to buy? I find that there are five basic factors to help you decide:

 

1. Credit Score. For those many individuals with some dings on their credit report, it will be very difficult to get a mortgage loan in today’s environment. In a rent-to-own scenario, renting can give those looking to build their credit history some time to do so while building equity. Conversely, however, those with a high credit score can now take advantage of the lowest interest rates since the 1950’s.

 

2. Liquidity Concerns. It is especially important in the present economic environment to make sure you maintain enough cash to satisfy your current cash needs, and many folks are finding it difficult to come up with the cash needed for a down payment to purchase a home. Rental rates on average are lower than a mortgage payment, which frees up a person’s cash to ensure other expenses are covered and credit isn’t damaged.

 

3. Unemployment Concern. I recently read an article by Forbes.com Real Estate columnist Matt Woolsey, in which he said “Given the state of the job market right now, the anchor of full ownership is a heavy one.” I find this to be so true with many of my clients, who are worried they might lose their job.If you share this unease, the rent or rent-to-own strategy may be for you, as it will preserve your credit and avoid a foreclosure scenario if you are unable to make payments.

  

4. The Flee Factor. Its not always a good move to purchase immediately when relocating to a new city or state. Renting gives the gift of time to evaluate the surrounding areas in your new city or state without the danger of financial loss by needing to sell soon after you purchased in a declining market.

 

5. Market Unpredictability. Even in markets like Denver, which was recently named the No. 1 city on the verge of recovery from the real estate slump by Barbara Corcoran on NBC’s “Today” show, data is mixed on when the housing market will actually “recover.” As such, renting is appealing as a “wait-and-see” approach until the forecast clears.

 

There are certainly cases for either option and the key is to educate yourself and make the best decision based on your own specific circumstances. A qualified real estate professional will help find the answers.  There are some creative options available now that people may have not traditionally considered.

   DenverRentAHome.com can help those in the Denver, Colorado and surrounding areas find those solutions with over 75 years of combined expertise in the residential rental and property management fields.  Visit today to find out how DenverRentaHome.com can help you find or fill your home today. 

 

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