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Best option for a new college graduate, rent or buy?

A big question for a new college graduate is whether to rent or buy. The answer depends on your financial situation, future goals and how long you intend to live there.

New college graduate rent or buyOne of the biggest questions for a new college graduate is whether to rent or buy. The answer depends on your financial situation, your future goals and if you intend to stay in your location for a few years.

If you are a new college graduate debating whether to rent or buy, price is also a big part of the decision. This is especially true if the you have huge student loans to repay. In some areas of the country, the price of houses and condominiums has dropped dramatically. Your monthly mortgage payment might be the same or even less than the cost of rent. Add to that the low prices of many foreclosed homes and you have more reasons to buy.

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Reasons Not to Buy When You're a New College Graduate

Several factors might make buying a house difficult for a new college graduate. For instance, most new graduates don't stay in the area where they land their first job. In addition, you may not qualify for a mortgage if you do not have a history of steady income. Next, think about your cash flow. Remember that when you own a home you pay the mortgage, insurance, utilities, maintenance and repairs, property taxes and possibly association fees. You typically don't have these expenses when you rent. You must also ask yourself if you have the time and money needed to care for your house and property.

To learn more about buying a home, get our free guide, "5 Crucial Steps When Shopping for a New Home" here.

Reasons to Buy When You're a New College Graduate

The biggest benefit of buying a home after college is that it's an investment. Buying a house builds your equity and net worth. A house will likely appreciate over time, and you would then have leverage to buy a bigger or better home in a few years. If the house has several extra rooms, you could rent them out to other people and use the money to help pay the mortgage. Plus, you get many tax deductions with homeownership.

After weighing the pros and cons, the answer to whether you should rent or buy a home after being graduated from college depends mainly on your personal situation and preferences. If you find a cheap place to rent, you can save money to buy your own home in the future. However, if you find a great deal in an area that you expect to stay long term, buying a house or condominium may be the best option for you. 

If you are intersted in comparing different types of homes for sale to determine which may be the best for you, read this article.

A real estate agent can help you investigate your local housing market, look at homes in your price range and decide whether as a new college graduate you should rent or buy. If you want to look at property listings now or find a professional in your area, go to Reply!

Photo credit: Bill Selak via Compfight CC.

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