Deciding to buy or rent a home is a big one. You will most often be committed to a location for at least a year and, in the case of a home loan, up to 30 years. You will want to make your best decision, but where do you begin? Following these steps to start on the path to understanding what your options are.

Understanding Your Budget

Before making a housing decision, figuring out how much you can pay monthly for rent or mortgage payments is vital. Establishing a budget that reflects your financial situation and includes consideration for recommended housing ratios is essential. Here's a step-by-step guide:

• Determine Your Monthly Income: Calculate your monthly income from all sources, including salary, investments, and additional income streams.
• Calculate Existing Expenses: List and sum all your monthly expenses. Include car payments, credit card bills, utilities such as your phone bill, and other recurring expenses.
• Estimate Additional Costs: Consider how much you spend on non-fixed costs like food, gifts, clothing, and other monthly incidentals.
• Subtract Expenses from Income: Once you have the totals for income and expenses, subtract the expenses from the income to find what's left over.
• Consider Savings and Emergency Funds: It's wise to allocate a portion of the leftover amount to savings or an emergency fund. Financial experts often recommend saving at least 20% of your income.
• Determine Rental Budget Based on Housing Ratios: You can use the remaining amount for a rental payment. A standard recommendation for housing ratios is that housing expenses, including rent and utilities, should not exceed 30% of your gross monthly income. If your rental budget exceeds this, you may need to adjust your spending or look for a more affordable housing option.

By adhering to these guidelines, you'll be able to find a price range that fits within your budget, aligns with standard housing ratios, and helps you maintain a healthy financial situation.

Defining Your Preferred Location

Considering your housing budget, the next step is to consider where you wish to live. Do you need to stay close to your job? Do you want to remain close to family? Being close to the freeway for commuting or to community parks can be important to you.

Think about the lifestyle you live and what's most important to you. For many people, this means being close enough to the people they want in their lives, such as family members and friends, but also being close to parks, shopping areas, restaurants, and schools.

As you consider locations, think about the community itself. Here are a few things to consider:

• Is the area safe? If you live alone, you must be sure you'll feel safe there.
• Does the area have a high cost of living? That could mean you end up with a smaller home within your budget.
• Does the location have good schools? If you have children, that could be an essential factor for you.

You ultimately want to feel at home here. To do that, carefully compare the community's amenities to determine how well they fit your lifestyle.

Identifying Necessary Amenities

Before you get started on your search, you also need to think about the necessary amenities. For example, you may need two bedrooms for you and your child. You may need a space you can set up for an office if you work from home. Do you need a parking space? Do you want to be on the bus line?

Consider anything that you consider a must in a new apartment or home. It will ultimately be a significant factor in determining your monthly payment. Larger apartments with more amenities cost more, but if you are not going to use some onsite amenities, like a fitness center, investing in a location with one is not worth your investment.

Considering Desired Housing Types

When it comes to renting, your budget will also define the type of home that is best for your needs. While enjoying a more spacious rental is often a nice feature, too much space could be out of your budget or not a wise investment.

Consider the space you'll need based on the number of people living with you and the room required for your belongings. A one-bedroom apartment might be sufficient if you're living alone for the first time. These apartments are usually the most affordable, though they may offer limited space. Generally, the more bedrooms an apartment has, the more expensive it will be.

Think about other options outside of the traditional apartment. Some people love the ability to choose a home, a mobile home, or a duplex. Your privacy matters, but so does the community's availability of these home styles.

Assessing Your Lifestyle Needs

With all of this information, you may have a good idea of where you want to live. Before making that decision, determine how well it fits your lifestyle. For example, choosing a community with a great bike trail is crucial if you love to bike. If you do a lot of commuting to school, you may want to live closer to that location.

What free or onsite amenities are available to you? You can eliminate your gym membership and save money if you have an onsite fitness center.

Also, consider pets. Some locations do not allow them. Others charge a fee if you have a pet and may limit the number, size, and type you can have. If you have a furry friend, you may not be willing to give that up.

Takeaways

As you consider renting a place, consider what you need:

• What amount of space do you need?
• How much of your budget will you spend on your home's rental costs?
• Do you want to live on a smaller budget for better amenities?

Compare several locations to find one that offers everything you need. Research and consideration of locations that may be new to you could open the door to new opportunities.