Better for Debtors to Buy or Rent?
By Drew Johnson on Wednesday, October 24th, 2007 :: 10:27 amCategory: Drew's Corner
The New York Times website has a nifty gadget that allows you to see whether it is more economical for you to buy or rent a home according to two factors: the annual home price appreciation and the annual rent increase or decrease.
For users of debt-relief programs like debt consolidation and credit counseling, whether to rent or buy is an important question. A home is a major investment for most people. It is often their paramount method of building wealth and saving for the future.
If you already own a home and have used a second mortgage or home equity line of credit for debt consolidation, then you need to focus on paying back what you borrowed and continue building your wealth.
But if you are new to the idea of purchasing a home, consider these three factors:
- How low is your credit score? If it’s bad, then you might want to apply for a home loan until your credit has improved. A higher score can guarantee you a lower rate on your loan.
- Will you be moving soon? If you use the NY Times tool mentioned in the first paragraph, then you can get a general idea of how long it will take to make a profit on your home investment. Don’t buy a home if you know you’re going to move before it has a chance to appreciate in value.
- Have you changed your spending habits? After debt relief, you may be flush with the bliss of not owing any more to bill collectors, but has the core issue really changed? Remember, debt relief is about more than just a temporary fix, it should induce a permanent change in behavior. Don’t commit to a long-term loan if you can’t keep the plastic in your pocket.
Author Bio: Drew Johnson is an expert in the various methods of debt reduction and has successfully reduced his own debt. Read additional articles by Drew on debt management, credit management and more.
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