Buying a home is a huge investment, for most people it’s the biggest investment of their lives. It requires a significant amount of upfront money. You are likely to make payments which may be considerably more than your existing rent. While costing more in the short term, it can turn out to be the best financial decision in the long run.

In most situations, buying a home is much better than renting it. However, renting is preferred for any of the following reasons.

• You make lower rent payments.
• You have intentions to move to a new place shortly.
• You live in an expensive residential area.
• You have utilized your monetary resources in some better investment.

Housing Expenses: When you rent a house, the organization or owner of the property uses your rent payment to take care of different maintenance and tax expenses. However, paying for these expenses becomes your own responsibility once your become a home owner. Now, you have to bear these extra costs along with mortgage payments. Your revised budget incorporates different charges in the form of maintenance, home insurance, membership fee, utilities, property taxes, and Home Owner Association charges.

Consider Your Long Term Plan: Buying a home can be a worthwhile decision only if you intend to own it for at least five years. Anything less than that takes the value out of your huge payments. When house prices fall, people typically rush to purchase homes without considering their plans and needs. It is not a very wise idea as it can potentially upset their financial resources.

Do Not Forget About Selling: Owning a home involves greater risks than shares. It incorporates liquidity risks, that is how inexpensively and rapidly you can convert your asset into cash. When you eventually decide to sell your house, you have to arrange contracts, lawyers, estate agents, taxes, and fees. The procedure can prolong when the housing market is depressed.

Buy Only If You Can Afford: It is never a smart idea to buy a home that costs a lot more than what you can afford. The value of your home owning decision majorly depends on how well you execute it. There are different calculators available online that can offer you a better idea of how your expenses, debts, and incomes affect your affordability.

For a great majority of people, buying a house is an investment that involves most of their financial resources. Not only do they pay a lot of money to acquire their dream home, but also end up paying mortgage payments in the months to come. Therefore, it is important to consider its implications before opting to buy a home.