Renting vs Buying
Freedom: If you want to travel for extended periods of time, say months – years at a time, owning a home may not be the best move for you, unless your area has a strong rental market and you have family or friends in the area that would be willing to assist with your property while you are away.
Tumultuous Futures: When you purchase a home you have to pay closing costs to the tune of 3.5% of the purchase price. Say you purchase a $250,000 home. Your closing costs would be approximately $8,750. If you expect that your job may change in two years and you will be moving out of state or if your long term romantic partner lives out of state, it may not be the right time for you to buy. It costs money to both buy and sell a home. If the fees that you will pay to purchase a property outweigh the equity you will build and the pace of appreciation, then purchasing may not be your best move. As a general rule of thumb, I don’t recommend purchasing a property unless the buyer has plans to live in the home for at least 5 years.
You are terrible at saving money: Owning a home can come with untimely and unexpected expenses. If your hot water heater breaks, you aren’t calling the landlord; you’re on the phone with a plumber and then off to Lowe’s to buy a new tank. Or say when you purchased your home the home inspector let you know that your roof will need to be replaced in 5-7 years. Can you discipline yourself to start setting aside money for that now? If you live paycheck to paycheck and have a hard time saving for a rainy day, you may decide life would be less stressful if you keep renting.Why buy?
Equity: Sick of throwing $700-$1600 a month down the drain? I was! When you pay rent each month, you are essentially helping someone else build equity in their property. Why not build equity in your own home? Every time you make a mortgage payment, you are building equity in your home and your future.
Tax Benefits: If you have a mortgage loan under $1 million, any interest payments and property taxes are tax deductible. This is a huge tax benefit that renters are missing out on. Woohoo for saving money!
Stability: Unlike rent, if you have a fixed-rate mortgage, your payment won’t go up on a landlord’s whim. While you cannot rely on the price of gas staying the same, you can rest assured that your mortgage payment won’t go up. A steady mortgage payment makes it easier to budget long term. A steady payment also becomes a bigger and bigger bonus the longer you remain in the home as home values rise and rent prices around you inflate.
Appreciation: Historically, over time, home values rise. This means that you can reasonably expect your home (if you keep it for several years) will be worth more when you sell it than when you bought it.
Freedom: This one is simple; when you buy a house, besides any city regulations or Homeowner Association (HOA) rules, you can do what you want to the property. Want to paint your kitchen pink? Want to turn your garage into an insulated workshop? Go for it, you can do that with your own home!