Pros -
- Sense of ownership
- Build equity in an asset rather than paying it all to someone else
- A house usually grows in value at, or above, the inflation rate
- Privacy
- Freedom to do what you want with the house for decorating and renovations
- Financial security for retirement
Cons -
- Tied to that housing market when it is time to sell
- As people's jobs become less fixed, the ability to stay in one place also decreases
- Costs are more than just a mortgage payment (property taxes, utilities, maintenance...)
- Rent is usually cheaper than the total costs
- Difficult to come up with the down payment (higher down payment is better)
- Housing values can, and have, dropped
- A house isn't worth any money until you actually sell it
3 guidelines for buying a home are:
- Buy what you can afford, not what you want, with some money left for extras.
- If you are going to live somewhere for less than 3 years, renting usually makes better financial sense (closing costs for each purchase add up).
- Think of your house as a home, not an investment. If it's worth putting in better windows to keep you warm, then do it. Don't just think of the resale value, but of what your life is like living in the house. Keep in mind not to overspend, however, as hardwood floors and marble kitchen counters in a neighborhood of linoleum and Arborite will not even come close to recovering costs if the house is sold.
Just a few items to think of as you look at renting versus buying. While I have enjoyed owning a home, the constant maintenance work and costs, along with the rising property taxes, do sometimes make me long for the ease of renting. But I could never tear down a wall in the basement and add a bedroom in a rental, making the basement just the way I want it. Jerry
For the past 40 years rent has usually been lower cost than a mortgage. Somehow starting in 2001 people started to think that rent should cover the mortgage. That is why so many young homebuyers started buying homes instead of renting, because the cost was so similar, sometimes even cheaper. Especially in Rocky where all houses and land is more expensive than it should be. Rent is still high, even with all the vacancies.
ReplyDeleteRocky is too expensive. There are so many vacant houses to buy or rent, but the prices haven't dropped. I've told my kids to rent from somehwere further away because it is cheaper.
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