Finding a place to live? Consider (literally) all the options before jumping in

Finding a place to live can be incredibly stressful. For most people, there is no bigger purchase than buying a home. It’s a long, time-consuming process that will go a long way towards deciding your financial future.

Financing your living situation doesn’t have to be so hard though. Let’s break it down into manageable decisions.


Renting vs. buying

Based on your age and net worth this decision may have already been made for you. But once you get to a certain point in life the question of whether to rent or buy a home becomes a very real one. Each has its pros and cons.

Renting is usually cheaper. It also affords you more moving flexibility, and,  is more convenient  for the lazy, some help when it comes to home maintenance.

However, buying can be more profitable investment if the value of your home goes up over time, since owning a home is one of the key ways many people save for retirement. It also provides some tax benefits., and the act of buying a home is considered one of life’s major accomplishments.

If you’re having a hard time deciding what to do, look at your career, credit, and net worth. Then compare prices in your area, and think about  consider when how long you until you plan on moving again. If any one of those questions doesn’t add up, you probably aren’t ready to buy yet.

Still unsure? Calculators like at the New York Times can help you decide.


Where to live?

This is often the first step many people take prior to moving because much of it is a matter of personal preference. There are many factors to consider outside of cost that make this the most fun part of the moving process.

Do you want to live in a city, suburb, or rural area? How far from your job do you want to be? What’s your transportation situation? What do you want nearby? Do you prefer an apartment or house? All of these questions will determine how much you’re going to have to pay, and what your general cost of living will be when you move.

Each of these decisions comes with unique costs. Cities are usually more expensive than suburbs and rural areas. Houses stacked with appliances can cost more than apartments without a washing machine/dryer.

Perhaps most importantly, you’ll have to decide which of these preferences you’re willing to ignore based on what you can afford.


How are you going to pay for it?

Now we get to the fun part: financing. How you pay for your home, whether it is with be it cash paid straight to your landlord or an adjustable rate mortgage, will have a large impact on your current and future financial situation.

A common financing method for people buying a home is a mortgage. Mortgages involve you making monthly payments for 15-30 years before the house is finally in your yours to own name. In the meantime, your house is collateral and can be taken back by the lender should you prove unable to make those payments.

The two most popular types of mortgages are adjustable rate and fixed rate; this refers to the interest on the mortgage. Adjustable rate interest rates can go up or down over the life of the loan, while fixed rates never change.

There are many more specialized types of mortgages with different terms and incentives. Further reading will help you decide which is right for you.

If you only decide to rent, you aren’t making as big a financial commitment. A general rule of thumb is not to spend more than 30% of your income on rent, butthough keep in mind that it doesn’t take into account additional costs like utilities and parking.

These are just a few of the choices you’ll have to make when moving. The most important thing to remember is not to rush into anything, especially when buying a home.

You want to have a complete understanding of your financial situation and the current housing market, and at least have an idea of what the future holds for you before you make one of the biggest financial decisions of your life.

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