What To Do Next: Rent Or Buy A House In Shanghai ?

First time homebuyers have a lot to consider when making the decision to rent or

buy a home in Shanghai: interest rates are at all-time lows, there's still plenty of housing stock and prices are at or near their lowest in years.

1. What will the monthly costs be and can I afford the payments?

Keeping mortgage payments under 30 percent of your monthly income is a good rule of thumb. If you can't keep mortgage payments below that, you may be better off renting for a while.

2. What other debt do I have?

Total rent or mortgage payments plus credit obligations should not exceed 35 to 40 percent of monthly income.

3. What is my credit score? Can I qualify for a good interest rate?

A high credit score indicates strong credit worthiness, and that qualifies you for better interest rates on a mortgage. Maxing out on your credit lines and paying bills late will lower your credit score. The impact of a credit score on interest rates can be significant. For instance, a borrower with a score of 760 could pay nearly two percentage points less in interest on a mortgage than someone with a score of 620. Lower interest rates also mean lower monthly payments. If your credit score is low, you may want to delay buying a home until you can improve your score.

4. How much will taxes, monthly maintenance, or other fees cost?

Owning a home means you'll have to pay real estate taxes and other costs like maintenance. On the other hand, owning a home brings big tax savings at the end of the year. As a renter, the owner pays those costs for you.

5. How many years will I stay here?

Generally, the longer you plan to live someplace, the more it makes sense to buy. You'll build equity in your house and its value is likely to increase over the years. But if you just work there for a period, it will be better for you to rent a house for a while. But whatever you decide to do next, you can search the online property rental agencies first to ask for more information about rental or buying rates.

Here is another way to look at your options:

Advantages of buying a house:

1.Property builds equity.

2.Sense of stability and security.

3.Freedom to change decor

Disadvantages of buying a house:

1.Responsible for maintenance.

2.Must pay property taxes

3.May not sell quickly

Advantages of renting a house:

1.No maintenance responsibility.

2.Easier to vacate.

Disadvantages of renting a house:

1.No equity built.

2.No tax benefits.

3.Can't change decor.

4.Possible rent increases.

by: Brian Dardzinski

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