Renting Vs Buying

peachfigs

A home, that is.

What are your opinions, guys? I'm undecided and always hear "renting is dead money". Any insights?

links_slayer

well...there are certainly pro's and con's to each. depends on what you're looking for.

coliema

I would never rent, I feel like it's a waste of money in my opinion.

My mortgage is the same amount as renting an apartment where I live would be.

It all depends.

daveymac1

If you have the means to buy, then buy. Renting, all you are doing is giving your money to someone else to pay off their mortgage. Buying a house, you are putting money back into your own pocket with equity. Even if you buy something small first, then sell, and go bigger. Renting is basically for people who can't afford a down payment. Sometimes renting is almost the same as a mortgage!!!

BeachIron

It depends on quite a few variables, and these are just my 2 cents:

(1) can you take advantage of the tax deduction?
(2) can you afford the down payment or does that drain your savings?
(3) what is the real estate market like in your area? Home prices do swing and many people lose money. It also takes a long time for your investment in a home to pay off in many instances. Many advisors say you need to be in your home at least 5+ years to make buying worthwhile and that assumes a stable market.
(4) how secure is your job? If you lose your job will you likely need to move to find another one?
(5) how does the potential mortgage fit into your budget? Did you account for upkeep/capital improvements such as lawn care, appliance repair, a new roof, etc.?

peachfigs

If you have the means to buy, then buy. Renting, all you are doing is giving your money to someone else to pay off their mortgage. Buying a house, you are putting money back into your own pocket with equity. Even if you buy something small first, then sell, and go bigger. Renting is basically for people who can't afford a down payment. Sometimes renting is almost the same as a mortgage!!!

I understand that. It seems to create a bit of a vicious cycle too. I mean, what if you can't afford to buy, but due to paying rent can't afford to put money away in order to buy in the future?

atrebor18

I just read something that said people in my area are renting more because they feel its a safer option than buying since the economy is bad and whatnot so they don't feel tied to a house. I know my parents are in a rough spot because they can't sell the house and that means my dad lives in a city 4 hours away in a crappy apartment while my mom lives there.

quirkytizzy

If you have the means to buy, then buy. Renting, all you are doing is giving your money to someone else to pay off their mortgage. Buying a house, you are putting money back into your own pocket with equity. Even if you buy something small first, then sell, and go bigger. Renting is basically for people who can't afford a down payment. Sometimes renting is almost the same as a mortgage!!!

I understand that. It seems to create a bit of a vicious cycle too. I mean, what if you can't afford to buy, but due to paying rent can't afford to put money away in order to buy in the future?

Yeeeep. That's part of teh sucktitude of renting. I could have owned half a decent sized home just over the last 5 years with what I pay in rent.

BeachIron

I just read something that said people in my area are renting more because they feel its a safer option than buying since the economy is bad and whatnot so they don't feel tied to a house. I know my parents are in a rough spot because they can't sell the house and that means my dad lives in a city 4 hours away in a crappy apartment while my mom lives there.

^^ This is what is so often forgotten in the "you gotta buy" advice. Mobility is very important in today's economy. The U.S. government has crafted the tax laws such that there is a tax advantage in buying. But, honestly, if you are not getting a significant tax advantage, then buying isn't always the best option. Most importantly, if the market goes down, then it may be impossible to sell your house and renting it out may not pay your mortgage. It's a much more complex decision then most people think.

peachfigs

If you have the means to buy, then buy. Renting, all you are doing is giving your money to someone else to pay off their mortgage. Buying a house, you are putting money back into your own pocket with equity. Even if you buy something small first, then sell, and go bigger. Renting is basically for people who can't afford a down payment. Sometimes renting is almost the same as a mortgage!!!

I understand that. It seems to create a bit of a vicious cycle too. I mean, what if you can't afford to buy, but due to paying rent can't afford to put money away in order to buy in the future?

Yeeeep. That's part of teh sucktitude of renting. I could have owned half a decent sized home just over the last 5 years with what I pay in rent.

Hmm, that's what I'm scared of!

felice03

If you have the means to buy, then buy. Renting, all you are doing is giving your money to someone else to pay off their mortgage. Buying a house, you are putting money back into your own pocket with equity. Even if you buy something small first, then sell, and go bigger. Renting is basically for people who can't afford a down payment. Sometimes renting is almost the same as a mortgage!!!

Not true. As a single mother I prefer renting bc if something goes wrong I don't have to fix it. I call the landlord and he takes care of it. I may be able to buy for less but not having the hassel of upkeep is a better peace of mind right now.

iLoveMyPitbull1225

Sometimes renting is the best option for people at different points in life. My boyfriend and I rent right now, it is our first place together. But we are looking to buy in the near future!

tiffanyarowell

I think buying is a great option if you can afford a down payment (ideally at least 10-20%) and plan on staying in the house for at least 7-10 years. If you see yourself moving in less than that time frame, I would say renting is a better option. If you get a 30 year mortgage and pay it for less than 5 years and then decide to sell, you will have built up very little equity as the majority of your monthly mortgage payment goes towards interest. Not to mention, it can be difficult to sell a house quickly in this economy.

Dave Ramsey gives a lot of great advice about buying vs renting http://www.daveramsey.com/articles/article/articleid/the-truth-about-real-estate/category/lifeandmoney_realestate/

SmartAlec03211988

Because I'd be responsible for the upkeep of the home as well as the mortgage, I don't see myself buying a home in the future unless it was in entirely in full (which is unlikely, as if I even had a quarter million dollars I doubt I'd blow it all on a single purchase like that).

I'll always rent.

zenchild

My husband and I heard the same thing. Renting is wasteful! Buy a house! Good investment! So we bought a house. We considered it an investment and planned on moving in 3-5 years and using the profit as a down payment on a house we really wanted. It's been 7 years and we're still underwater. If we'd rented those 7 years we'd still be even. As it is, we've paid to have the HVAC fixed, the hot water heater replaced, landscaping, flooring, etc. And we're still stuck in a place we'd rather not be. We're hoping to be able to rent the current place next year and move. But that depends on if we can refinance this place and get the cash for a down payment on another place.

If we loved the house, none of this would matter. So if you absolutely adore a house and have no plans on moving (and your job is very secure), go for it. If you're thinking about buying just because people tell you it's a good idea, point out that there are many people still trapped in homes that are so far underwater that it will be another decade before they can break even.

Rottnme

It varies from place to place and there are definate advantages/disadvantages to both but in the area I live, I tell people that if the bank will let them buy, buy. Rent in this area is typically the same or more than you would pay to buy a comperable home AND you have are builiding equity with every payment. I like to tell people, and practice, putting a little extra money in towards principal every month. Look at a mortgage calculator or two and you will find that if you can afford an extra $50 or so a month, it equates to YEARS off the backside of a mortgage.

janetay01

Depends on so very many things. My husband and I have just purchased our first house after years of renting and saving money for the deposit and there is no better feeling. But, it took years of saving money and cutting back on holidays etc - and a helpful boost left for my husband in a will - before we were able to do it.

You are in charge of your own home - having rented from landlords who could litterally take months to fix something that a tenant should expect to be prioritised - e.g. busted heating in the middle of November with temperatures in the minus figures - I will take the extra cost to us now because we are in control. But I acknowledge that we are lucky to be able to do that.

Depends on your circumstances I think - and where you live and the housing market. I'm UK based and our housing market is completely crazy at the moment!

bonsaidi

I am in the same boat. I spoke to a friend who recommended wiping out ALL credit card debt BEFORE even considering such a thing.

janetay01

I am in the same boat. I spoke to a friend who recommended wiping out ALL credit card debt BEFORE even considering such a thing.

This absolutely - debt has a quite shocking effect on your ability to get a mortgage. Our first mortgage quote was with 2-3k on credit cards. When we went back with 0 debt, the amount we could borrow went up by about 50k!

verdancyhime

I just read something that said people in my area are renting more because they feel its a safer option than buying since the economy is bad and whatnot so they don't feel tied to a house. I know my parents are in a rough spot because they can't sell the house and that means my dad lives in a city 4 hours away in a crappy apartment while my mom lives there.

This. If you want to purchase in the future maybe get a flexible lease.

To be honest, I don't really look at homeownership as a temporary thing, where you are going to sell off at some point. I also seriously think the idea of "equity" needs to be looked at. I grew up poor and unfortunately am currently in debt (I didn't even get to buy anything fun with it, it was mostly groceries and medical bills.) but I can't imagine putting up something as important as my place to live as collateral for a loan- so if something happens and you can't pay it back, or the lender decides to change the terms somehow... you end up with no place to live? As a low income person, having no place to live is the bogeyman in my household. You do all that work and then finally pay off your home when you're like 67, and then it's yours. Before that, the bank can take it away at any time. It's not yours til then. And other than renting out a room or something, I don't really see a "safe" way to make money off your home. I learned like 2 years after being old enough to drink- credit is NOT money. I wish I'd learned it sooner and wealthy people who bet their home on stupid things like "I'm gonna buy new furniture, but I have good credit, I own my home!" confuse the heck out of me.

Also, I hate the area I'm living in. If I find a life that doesn't make me daydream about hopping a bus somewhere totally different, I will buy a house there.

Kristiina67

I just sold my home of 15 years and took $75000 loss. Renting would had been much more profitable... That $75000 did not include all the Home Depot trip over the years, prolly another $25000. I will never own ever again! Waste of money!!