The Mortgage Crisis, Buy Sell or Rent?

With the mortgage crisis the way it is people are selling their homes at an alarming rate. The sub-prime mortgage crisis has taught us all a thing or two. Figure out how much you can afford to spend on a home and spend no more than that. Do not buy a $400,000 house when realistically speaking you can only afford a $200,000 house.

With the mortgage crisis the way it is people are selling their homes at an alarming rate. The sub-prime mortgage crisis has taught us all a thing or two. Figure out how much you can afford to spend on a home and spend no more than that. Do not buy a $400,000 house when realistically speaking you can only afford a $200,000 house.

During a mortgage crisis many people wonder if they should buy, sell or rent? This is not always an easy question to answer and each situation is uniquely different because each person’s financial circumstances and lifestyle considerations are different.

If you are a renter you should not give into the pressure to purchase a house. At the same time you also need to know that there is no shame in renting as opposed to owning. You have to do what is right for yourself and your family. Only you can decide that based on the life you live and the needs you have.

As a renter during a mortgage crisis you need to ask yourself if you can afford to buy or if you should wait until the crisis passes before you jump into the existing housing market. According to Warren Bland, a geography professor at California State University-Northridge and author of the book “Retire in Style: 60 Outstanding Places Across the USA and Canada” (Next Decade Inc.) a renter should be able to put down 10 percent as a down payment. He or she should also ensure that the mortgage principal, interest, taxes and maintenance come to no greater than 33 percent of the individual’s net income. Any more than that then you are heading into dangerous and murky financial waters.

Your mortgage payments are only one part of your monthly expenses when it comes to owning a home. Whether you should buy if you presently rent or rent if you presently own depends not just upon the market but it also depends upon you. The same goes if you currently own a home and wonder if you should sell it. 

Buying is not always the absolute best option while renting is not necessarily something that you should feel embarrassed about. When prices on houses are high it might work to your advantage to continue to rent until prices go down. In this way you and your family will not have to go without other important things such as educational pursuits and the opportunity to travel in order to pay for the house in question. In some types of markets, such as during a market crisis, rentals make more financial sense than buying a house. Enjoy you time there until prices in the housing market show signs of improvement.

Many renters cite such things as difficult landlords and difficult tenants as well as apartments in need of upkeep and not worth the price being charged for rent as reasons to want to buy. These are all valid reasons to want to make a home purchase.

While renting may involve some headaches and lower financial responsibilities it comes with a price. In other words there is no equity built up in it while you live there, no value appreciation and no tax benefits whatsoever. Bear this in mind- you should remain living in a house for a long enough period of time that you will be able to recoup your buying costs. If you plan to leave a house in two to three years then it would make more financial sense to continue to rent.