Renting vs Homeownership
The case for renting
While homeownership is a goal for many, it doesn’t make sense for everyone. If you are toying with the idea of jumping on the first rung of the property ladder, here are some points to consider.
If you live in a city where housing prices are sky high, the price of admission into the homeownership pool can be pretty steep. You can be looking at saddling yourself with substantial mortgage debt, in addition to the other costs of homeownership.
While real estate can be an excellent investment option over time, is it worth the sacrifice day-to-day, just to own a home?
How are you at saving?
If you’ve not been able to put aside much money for your down payment to date, it’s not going to get any easier to save after you become a home owner. Ideally, you should have already established a tidy cash fund, along with good savings habits. You’ll need to continue to save into an emergency fund. You’ll inevitably need to spend on home maintenance and repairs over time, and you don’t want to have to turn to debt to cover those costs.
Can you stay put for more than 5 years?
If you see yourself moving around in the next 5-7 years, renting is probably a better option. Buying and selling homes come with a lot of costs attached (i.e. closing costs, moving costs, realtor and lawyer fees, mortgage interest etc.). It takes several years for you to absorb those costs and to begin to realize a return on your housing investment.
When owning a home means major lifestyle changes
If you are looking at buying a home, but moving further out of town because that is all that you can afford because prices are often lower out of the urban core, how will owning a home change your lifestyle? Are you looking at taking on a major commute? Do the costs (financial, physical and mental) add up against your homeownership plans?
While owning a home is a good goal to work towards, renting can be a more attractive option if it fits your budget better.