Renting Versus Buying: What’s Right For You?
For many young people, the idea of buying a house seems like a far off fantasy. To buy a home, you have to be extremely responsible because, at the end of the day, it’s expensive; some people just aren’t ready. Well, those young people would not be wrong. Buying a home is hard and it takes a responsible person to own one. However, the process may not be as expensive as you think. Many experts have found that, after taking into account all aspects of buying or renting, the two are not all that different. It comes down to the housing market in a certain area to decide whether buying or renting is more frugal in the long run. Obviously, places like San Francisco and New York City have extremely high housing costs and, for young people with few assets, it may be hard to secure rental housing let alone property to purchase. For most of the country, however, it all comes down to individual factors beyond just price. Take a look at some of the factors which could decide whether homeownership is right for you.
Saving for Down Payment
While costs are similar between buying and renting over the long term after factoring in things like equity or renters insurance respectively, one thing is true for home owners: there are more up front costs. If you’re in a position where you can put away a little money every month and build a substantial plan for making a down payment, buying may be a better option. Because rent payments and mortgage payments are typically so similar, once the down payment is squared away on a house you’ll actually reap the benefits of homeownership for close to the same price as renting! This is truly the main cost which separates those who want to own and those who need to rent a little longer.
Homeownership is not for everyone. People who still want to move and explore new areas may not be in the best position for homeownership. However, many young people are building their careers and want to stay in the same community for between at least five to ten years. If this is the case, buying may be a good idea. While you may not even pay off the house in that time and decide to move, you can use the money from selling the home to pay off the rest of your mortgage and you’ll still have the freedom to move. This process is harder than it would be to finish out a lease or rental agreement, it’s not inherently bad. Also, you’ll come out with a track record as a borrower who repays their mortgage well and you may be offered better rates when purchasing your next home!
This is where renting edges out a bit over buying. Rental homes have the inherent benefit of making maintenance someone else’s problem. Homeownership means that if the water heater goes out or your AC unit stops working, the repairs are up to you. However, if you like changing and renovating a home beyond new paint colors and a nice lamp, purchasing a home may be the way to go. While it does mean taking care of repairs yourself, it also gives you the freedom to knock out a wall if you choose; you have to take the good with the bad. (Side note: please call a professional if you want to knock out a wall. It’s a good precaution to take).
Obviously, there are strong arguments for renting and for homeownership. However, purchasing a home gets a bad rap as something you have to wait for until you’re somehow older or better or more secure than you are now. For many, however, that’s an idea that’s built out of fear and not out of facts. Take a look at the housing market in your area and get in touch with a professional to find out if homeownership is achievable for you!