Renting vs. Buying a Home
How much is that rent check really costing you?
There’s plenty of gray area in the debate between renting and buying a home. For years, buying a home was at the top of the list for the American dream. After the housing crisis, there was a backlash against homeownership, and renting was the preferred option. Let’s take a look at both sides and figure out if homeownership is right for you.
Here are some things to consider:
- Rent prices
- Mortgage interest rates
- Stability vs. flexibility
- Financial, career and family goals
The first thing to consider is the cost
A good guideline is the 25% rule, where housing costs shouldn’t be more than 25% of your net income. If you’re thinking about buying a home, make sure to consider more than your monthly payment when calculating this, and have enough saved in case of an emergency. It’s better to think of buying a home as a purchase, not an investment. If it’s your primary residence, you’re unlikely to come out significantly ahead of inflation.
Another factor is freedom of movement
Young professionals are more likely to move for their careers than families with children in a good school system. Determine where you’re at with your finances, career, and family. If you want the freedom to pack up your few belongings and move across the country at a moment’s notice, you’ll be better off renting. If you’re done moving year after year, the stability of owning your home is a big advantage.
Costs of maintenance and upkeep always come up in this debate. If you own a home, you’re responsible for any maintenance that needs to be done, from small repairs to major renovation. Keep in mind, before you buy a home, it’s important to get a licensed home inspection. This will help find potential problems before you’re responsible for them. At that point, you can arrange to have the seller fix the issues or drop the price to allow you to make the fixes.
Along with the responsibility of maintenance, you have the freedom to paint, remodel, and customize your home to your heart’s desire. Depending on your finances and willingness to put in some sweat equity, you can create your perfect home. Check out or blog on Kitchen Renovation for some remodeling tips when you’re on a budget. If having the creative freedom to change your living environment is important, consider buying a home.
