Friday, November 2, 2007

Rent vs. Buy: The Debate Continues

With the recent housing market turmoil, the controversy over rent versus buy has returned to the forefront in the financial press. This new focus varies greatly than the majority of the articles printed two years ago, which all emphasized the importance of purchasing a home at all costs.

In short term situations, renting has advantages over buying. For those who want to settle down for the long term, home ownership has some key advantages over renting; it provides some good tax breaks and allows you to build equity over time. Ownership is an excellent form of investing in your future.

However, it is important that you only put yourself in a home ownership position that you can afford. Avoid interest only and other exotic loans. If you can not qualify to purchase a home under traditional lending standards with a 30 year fixed rate loan then you should not pursue the situation. Currently most of the population is watching awestruck at what transpires when property owners over-extend themselves. In many cases these foreclosed owners should have never been given a mortgage. The good news is that banks are quickly returning to traditional lending standards which should avoid a repeat of this fiasco.

One good method of evaluating homeownership versus renting is to take a levelheaded dollar and cents based approach. For people that plan to hold onto a home for the long term, there is usually a significant financial edge for ownership. One valuable calculator that provides a comparison can be found at:
Should I Rent or Buy A Home?

One recent article about the “New Realities of the Rent vs. Buy Debate” can be found at:

Now That Housing Has Soured, Renters Are Glad They Didn't Buy
With real estate in a slump and foreclosures soaring, renters are cheering now. Is the conventional wisdom that it's better to buy than rent mistaken in today's market?,-Renters-Are-Glad-They-Didn't-Buy;_ylt=AsBWkzMQVUcwR6U4hOjGB9i7YWsA