Buying vs renting is one of the oldest dilemmas around. Financial gurus are very fond of saying something along the lines of “Homeowners get rich while renters stay poor.” Granted, there is much truth in this saying. Part of your house payment every month goes to paying down your mortgage. Add in home appreciation and you’re growing your net worth every month. Why wouldn’t everyone want to own a home then, you ask? Well, here’s a list of reasons off the top of my head:
- Buying costs much more every month ( mortgage + insurance + property taxes )
- Fluctuations in the housing market means your home may lose value short-term
- Repair costs can be significant in the event of a major problem
- Lawn & yardcare costs / extra work
- Energy costs will be significantly more than an apartment
In my current market, renting a nice 2 bedroom apartment runs a bit over a grand every month. To get a home that has similar features ( still have to give up some goodies, such as the gym & pool ) would cost more. Figuring in property taxes and insurance, we’d be looking at right around $1500 per month on a 30 year note - that’s a $500 per month difference. For the time being, we’ve decided to rent rather than buy - and here’s why.
I’m saving $500 every single month - and that’s just for starters. I estimate another $100 at least, in energy savings. That’s $600 per month in my pocket. Add it up, and I’m looking at $7200 per year, free and clear. And of course, if my water heater explodes, I simply call the apartment maintenance staff. They come in and take care of things while I’m off at work, and it doesn’t cost me a penny. I needn’t worry about spending my weekends mowing the lawn, trimming, edging, or shoveling snow in the winter. Granted, I’m not building any equity, and I’m not getting a big tax break due to mortgage interest, but that’s ok. I enjoy having less stress than I would as a homeowner, at least for right now in my life. I’m sure I’ll join the ranks of happy homeowners one day, but it will not be today.
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