Making the decision to rent a house or to buy one can keep you up at night, but taking the time to examine your situation can make the decision easier. Will you need to move within the next few years? Are you earning enough to take on a home loan? Are you ready for the responsibility of owning a home? Answering these few questions can help you see the way forward.

Settling Down

If you know that you will need to move in the near future, renting is probably the better option for you. If you will need to relocate for a job or school, renting gives you flexibility,  but if you are ready to settle down, buying may be a possibility. Real estate professionals recommend staying in a property for a minimum of five years in order to recoup your investment–of course, this depends upon market fluctuations–but even while you are renting, you can take steps to make buying a home in the future much easier. Be sure to always pay your rent and bills on time. This will help you establish good credit and this will be important when you are in a more stable situation and ready to buy.

Examining Your Finances

The money you pay in rent is essentially gone, but house payments build equity and are an investment. Take a look at your monthly income and expenses, or debt-to-income ratio (DTI), an important consideration when applying for a home loan. To calculate your DTI, add up all of your recurring, regular monthly payments for things that are considered debt, like car loans, student loans, credit card payments or mortgage payments. Then divide this figure by your total monthly income calculated before taxes–also known as monthly gross income. A DTI under 50 percent is acceptable, but a DTI of 20 percent or less will give you more financing options. A Sun West Mortgage representative can help you find financing that works with your situation.

Taking on the Responsibility

When you rent, the landlord takes care of maintenance and repairs on your home, or you hope that is the case. When you own a house, that responsibility falls to you. But you also have the flexibility to choose how your home will look: you can decorate it how you like, decide on your landscaping or paint it whatever color you choose. You can make your home a true reflection of your style, which is not always possible with a rental property.

Once you have examined your living situation, finances and desired level of responsibility, you can make an informed decision about renting or buying a home. No more sleepless nights!