When to Buy, When to Rent ( 2 )

Though some people think that equity is an automatic feature of buying
any home, that is not universally true and that comes down to time
spent living in a home as well. When you buy, you pledge to pay not
only the purchase price of the home but the interest payments on your
mortgage as well. Over the first few years of payments, much of what
you will be paying goes towards that interest amount and little goes
towards paying down the principle, the purchase price of your home.

For those people that only plan to be in a particular town for a few
years or even shorter, buying a home does not often make sense when
renting offers the ability to perhaps pay less and escape some
financial obligations on things like repairs and particular utilities,
depending on your rental agreement.

Of course, cost of the area also plays a big part in the buying or
renting decision. In some areas, you may be able to purchase a
particular home and pay $1,400 for your mortgage payment, taxes and
associated fees for a property that might otherwise rent for $800 or
so. While I by no means suggest that cost is not an important factor
by not including it in the two biggest factors contributing toward a
buy or sell decision, time spent in a particular property can erase
many of the cost fluctuations seen in a short-term stay at a property.

Of course, there will always be exceptions to every rule and your
situation is unique to you. If you have buying or selling concerns
during the home-buying process, consult a realtor or other real estate
authority that can shed some light on the exact financial situation
you are looking at in either situation. Realtors can provide to you
estimated mortgage payments and other critical information that can
give you a better foundation to make a decision from. It is important
that you feel comfortable with your decision to buy or rent, so do the
best homework possible to ensure a strong, confident decision.