Renting vs Buying A Home: Which One Is Right For You?
When you’re googling ‘renting vs. buying a home’, you’re probably a young adult wondering what the smartest way to spend your money is. Well congratulations, you’re already in the right step trying to learn as much as you can on the subject. Properties are scary and confusing. An error in judgment will cost you thousands of dollars, and maybe more. On the other hand, the right decision might earn you thousands of dollars more.
WHEN IS RENTING BETTER?
The most common argument about renting is that you’re potentially giving away the same amount of money that could have bought you a house.
Speaking as a mortgage company, we’d like to give a rebuttal.
You’re not giving away money you spend on rent. You’re paying for the freedom of commitment and caretaking. You’re not the one spending money on maintenance or on roof replacements. The truth is not everyone’s ready for a large investment, especially a risky one.
And as a matter of fact, buying a house isn’t always the best option. Here’s when renting could be better:
The Housing Market Is Extraordinarily High
If you’re at a place where the house prices aren’t reasonable for what kind of house you’re getting, don’t buy it. What’s not worth it isn’t worth it.
Your Rent Is Lower Than Average
If you’re getting a hell of a discount or you’ve hit jackpot on where you’ve been renting, you’re probably better off staying there. Granted, you expect the rate to stay that way years from now.
You’re A Mover
If you’re confident that you’re moving to a different geographic location in a few years, forget about buying a house. You would only be causing unnecessary pain to yourself.
Your Money Is Best Used Elsewhere
Capital is a limited resource, and you need to plan its use correctly. If you’re in a position where you can invest the money somewhere else that’s less risky than a house, go do that instead.
Your House Isn’t Up To Scale with Your Lifestyle
There’s little reason to buy a huge mansion with 5 bedrooms when you’re a bachelor. Throw your money elsewhere.
WHEN IS BUYING BETTER?
The simple answer is almost all the time. If your situation is anything other than a situation where renting is optimal, consider buying a house.
Home ownership is a long-term commitment, not an impulse buy. But rent, while not completely useless, is dead money — that means there aren’t any opportunities for it to grow. Rent wouldn’t also give you the feeling of stepping inside something YOU own.
If you truly want to buy a house but unsure if you’re moving soon, consider buying a house as if it’s an investment property. Even with the home improvements you make, it wouldn’t be wasted upon moving. Plus, if it’s rentable, you can always open it for rent.
If you want to get down on the details, use one of these renting vs buying a house calculator online.