Ready to Move? Consider Renting in Your New Town First!
September 4, 2013
When making a move, it seems like a nice idea to buy a home first, and move in. However, it might make sense to rent for a little while first, especially if you plan to sell your old home.
Here’s why it might make sense to rent first:
Trying to pay two mortgages can be difficult. Plus, if you haven’t managed to sell your old home yet, or you don’t have someone lined up, some lenders won’t let you buy the new place. It’s just too risky.
Even if you plan to rent out your old house as a source of income, it might not work out. First of all, many lenders like to see that you have at least 30% equity in the home you plan to rent out. Next, they won’t count all of your expected income in their calculations. As a result of these realities, you might not get approved for a home loan on a new house.
Instead of frustrating yourself, consider renting first, until you get the situation worked out with your old house. It might be cheaper overall to rent for a little bit, and re-evaluate your financial situation so that you can experience a greater chance of success when you are ready to buy.
Get a Feel for the Area
Another good reason to consider renting instead of buying – at least when you first make your move – is so that you can get a feel for the area. If you are moving to a new locale, you might not really have a good idea of what to expect. Where are the amenities? How close are certain neighborhoods to work and school?
Renting can provide you with the time you need to assess the situation, and to see what a town is really like. You can drive the neighborhoods and figure out where you really belong. It’s difficult to truly gauge a new area if you have never truly lived there. Renting gives you the time and the flexibility to find the right house in the right neighborhood.
Maybe You Don’t Ever Need to Buy
It’s occurred to me recently that I’m not sure that I really want to buy a house again. I’ve enjoyed living in my home, and I like it, but I don’t know about buying. My son is old enough now that he doesn’t really care about the backyard. My husband and I aren’t really into yard work, although we do what’s necessary to keep the property looking presentable.
I sometimes fantasize about living in a nice apartment building/condo development with a pool and fitness center, and heated underground parking. Renting doesn’t seem so bad in that circumstance, and it would still be less than what we pay when interest, property taxes, maintenance and other home ownership costs are factored in. I could invest the difference and not worry about being tied down to a house.
While being a permanent renter doesn’t appeal to everyone, renting does have its points when you are moving to a new area. Whether you want to wait until you can swing a home purchase financially, or whether you simply want to get the lay of the land before you commit to a mortgage, it can make sense to rent first.
What do you think about renting first? Does it makes sense? Leave a comment!
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