Some people regard homeownership as part of the American dream. It’s true that it comes with considerable perks that are at least worth thinking about if this becomes a realistic option for you. However, sometimes continuing to rent your home may make more sense.
In this article, we’ll talk about when you should continue renting and when buying a home becomes the more prudent option.
We’ll start by talking about when buying a home becomes a viable strategy. Your personal finances will play a big part in this decision.
If you have considerable debt and are looking into a multiple loan payoff calculator or similar options, it’s likely not the best time to buy. You should continue renting until you’re on more stable financial ground.
Homeownership comes with certain intangibles that are undeniably appealing. For one thing, you get pride of ownership. It can feel pretty great to pull into the driveway of a house you own. You can also start getting to know your neighbors and put down roots, which some renters don’t bother to do.
If you buy a home, you’re also able to build equity through it, and there are tax deductions you can take, such as for your yearly mortgage interest.
If you’re thinking about buying, though, you’ll first need enough for a down payment. You might be looking at an initial outlay of tens of thousands of dollars, or even more in some parts of the country. Regardless of where you are, ensure the property market conditions reflect realistic pricing.
It’s also important that your credit score is strong so that you can qualify for the lowest rate. Your overall financial situation should not suffer dramatically when you put down your first payment.
If you rent, you have flexibility. You can often leave after six or twelve months if the whim strikes you. If you’re nomadic, buying a home might not seem so appealing, even if you can afford it.
When you rent, you also get predictable monthly expenses. You don’t have to worry about particularly expensive times of the year, like when you get hit with a property tax or school tax bill. You have to plan for those if you buy a home.
If you rent, you can also rely on a super to perform any repairs. If you own a home, you need to pay for them yourself.
On the other hand, if you rent, you’re not building any equity. That’s probably the biggest argument in favor of homeownership. You also don’t get those nice intangibles, like stability and the pride that comes with knowing you’ve put down roots and invested in a particular neighborhood.
Should You Rent or Own?
No two individuals or families will be in precisely the same situation, so whether to rent or own becomes a deeply personal decision. Before ownership is even a possibility, though, you need enough money for that down payment and a cushion for unforeseeable expenses.
Figuring out how much that is should be your first step. If you have significant debts, or you know you can’t put down much money without completely destabilizing your finances, there’s little doubt you should continue to rent, at least for the moment.
If you can afford a down payment and monthly mortgage payments, you can start to think about buying more seriously. The intangibles may appeal to you, but understand that you’ll need to plan for significant expenses like school and property tax bills once per year. There are also tax benefits, though, and you can start building equity.
If you want to keep renting, you have more flexibility to leave. The nomadic individual or family might prefer this. You probably won’t have quite the same sense of community you’ll get with ownership. Additionally, you can rely on a super to fix a broken sink, but supers are not always dependable, and you may have to deal with a cranky landlord as well.
Consider all these factors very carefully as you weigh buying a home vs. renting in order to make the right decision for you and your family.