Renting vs. Buying a home

[dosekies]

If you started renting, how/when did you decide it would be the smarter investment for you to buy? Or what made you decide to keep renting instead of purchasing? Anything you wish you knew before buying?

We are thinking of setting up a meeting soon to see what we would be pre-qualified for and how we can prepare to buy our first home, but it's a scary feeling! We do pretty well but I'm always scared we will never be able to afford anything decent.

 

[sonnyjane]

DH was in the military for a long time, so we never bought as we didn’t want to get stuck with a house if/when transferred. When he finally got out and we relocated to the place we wanted to live long-term, we bought because we saw a great deal. At the time I felt we were jumping in sooner than I’d like, but I’m glad we did because we couldn’t afford our house now, just 4 years later!

 

[Marchand63]

It was age & career placement. We knew I was entrenched in my career in the Boston area, so was he. Rents were ridiculous if we went 30 minutes in either direction the mortgage was as much as rent. We got equity & permnancy.

Now we have 100% equity & freedom to do what we want. Rent would have given us nothing in the long run.

 

[LSUmiss]

We bought a house b/c it seemed liked rent was throwing away $. But, when things break in the house, I sure wish we could rent . At times, I’ve still thought of selling the house & renting, but I just think it’s too difficult to be at the whim of a landlord when you have kids & pets.

 

[CdnCarrie]

I always felt rent was a waste of money. As soon as I could afford a house I bought one.

Personally I think it's quite stupid to rent a house. I see ads for people renting a house where the rent is more than my mortgage/taxes per month! What a scam. I can see doing it in a temporary situation - new to the city, newly divorced, etc - but more than that is just a waste.

 

[Mackenzie Click-Mickelson]

When we looked at our situation--we had student loan debt, a little bit left on my husband's car loan but CC debt wasn't really existing at that time, housing costs were starting to rise, mortage rates were reasonable, we didn't have kids. We had our house built though so a tad different.

But really even though we spend more money than our rental house and more money than we did when we each had our own apartments it's at least going towards something.

Our rent cost us $1,350 per month+ utilities in the rental house and we had an 18 month lease. That's over $16,000 in just rent alone per year and a total of just over $24,000 for the 18month lease...at the very least we're getting more out of our money than before.

And given our area's housing market we made the right decision at the right time--mortgage rates were a tad lower when we finally closed on the home but building a house in terms of cost went up about half-way through the building time frame and nowadays what was a buyer's market back when we built our home has turned into a seller's market (with the market being fairly hot) in a few years time.

I do however have a best friend who has no interest in buying a house and is content renting for life. Renting works for some people.

 

[Pea-n-Me]

Mortgage interest is still tax deductible. And the first years of mortgage payments primarily consist of interest! It's not until the end of the mortgage that most of the payment goes toward the principal. (Of course, adding extra to the principal can help you pay for your home sooner!) So in some cases, when you figure out the tax advantages, having a mortgage, or owning, could actually be less than renting! But a lot depends on where you live.

After many years of paying what you'd pay, either way, it's a really nice feeling to have a good chunk of equity.

And interest rates are still so low! When we bought our first home, interest rates were up around 11.5%!

Time goes by whether you rent or own. You might as well make your money work for you. Good luck!

 

[kimblebee]

I always felt rent was a waste of money. As soon as I could afford a house I bought one.

Personally I think it's quite stupid to rent a house. I see ads for people renting a house where the rent is more than my mortgage/taxes per month! What a scam. I can see doing it in a temporary situation - new to the city, newly divorced, etc - but more than that is just a waste.

You may see it as stupid but if my washer, dryer, dishwasher, and fridge all die within months of each other I can call my landlord to replace them, not have to shell out thousands.

 

[tinatark]

We have several investment properties. I am happy there are people who rent instead of own. My rents are all $1000-1200/mo - not a lot of homes for sale in my area which would have principal/interest/insurance/repair costs less than that monthly.

 

[Darcy03231]

We live in an area with very high property taxes. We have a lot of friends that have sold their homes and downsized and rather than buy a smaller home/condo they've decided to rent. In some cases rent has been cheaper than property taxes, insurance and maintenance on a home. It's also a nice feeling to call the landlord when something goes wrong.

We opted to buy a smaller home, in a lower cost of living area.

To me, it's really a personal decision on whether to rent or buy.

 

[CdnCarrie]

You may see it as stupid but if my washer, dryer, dishwasher, and fridge all die within months of each other I can call my landlord to replace them, not have to shell out thousands.

True. But if I decide to sell my house I get money out. I don't get that if I rent. But yes there are expenses over and above mortgage and property taxes in a house but not in a rental.
By nature I'm just not a renter.

 

[CdnCarrie]

Mortgage interest is still tax deductible. And the first years of mortgage payments primarily consist of interest! It's not until the end of the mortgage that most of the payment goes toward the principal. (Of course, adding extra to the principal can help you pay for your home sooner!) So in some cases, when you figure out the tax advantages, having a mortgage, or owning, could actually be less than renting! But a lot depends on where you live.

Yup a lot depends where you live. I've seen houses going for rent for $1400-$1700 which is high to me for rent. But I understand some people can't qualify for a mortgage or don't want the responsibility of ownership.

Mortgage interest is not tax deductible in Canada. That would be cool.

 

[roliepolieoliefan]

You may see it as stupid but if my washer, dryer, dishwasher, and fridge all die within months of each other I can call my landlord to replace them, not have to shell out thousands.

True but u get nothing out of it
I will sell my house and gain the equity
Right now my house is worth close to $100,000 more than what i built it for 12 years ago
A washer, dryer fridge and dishwasher are nowhere close to that

 

[Squirlz]

I rented for 6 years until I had the money to buy. Renting is like leasing a car; throwing your money down a hole. Use your money to make money.

 

[LSUmiss]

We live in an area with very high property taxes. We have a lot of friends that have sold their homes and downsized and rather than buy a smaller home/condo they've decided to rent. In some cases rent has been cheaper than property taxes, insurance and maintenance on a home. It's also a nice feeling to call the landlord when something goes wrong.

We opted to buy a smaller home, in a lower cost of living area.

To me, it's really a personal decision on whether to rent or buy.

That’s our area. We did buy, but our taxes & insurance are very high so even once our house is paid off we will have a hefty bill to pay for those things so sometimes renting seems like a good idea.

 

[georgina]

DH and I bought a house 30 years ago when we got married, for $60,000. We have put a lot of money into it, adding on, taking out walls in a kitchen remodel, etc. We are in a lower cost housing area and it made sense for us to buy.

I don't think buying is always better financially than renting. My kids live in high cost areas - San Francisco, Seattle area, Washington DC. They like being in the city so they can use public transportation. It would be VERY expensive to buy a house where they live. The DC one is married and will probably have kids in a few years so they may be considering buying somewhere in Virginia. I don't see the other 2 ever buying where they live now. My son in particular is simply not interested in owning a home and associated responsibilities.

 

[DLgal]

I always felt rent was a waste of money. As soon as I could afford a house I bought one.

Personally I think it's quite stupid to rent a house. I see ads for people renting a house where the rent is more than my mortgage/taxes per month! What a scam. I can see doing it in a temporary situation - new to the city, newly divorced, etc - but more than that is just a waste.

You might think it's stupid but remember mortgages are 30 year commitments. You aren't just buying a house, you are also paying the bank approximately 4% interest, front loaded on the loan, maintenance and upkeep, and property taxes.

Not everyone has a 20% down payment for a house. Very few can purchase a home with cash upfront.

We have been renters for 17 years now. No regrets. We have moved 3 times in 17 years. We are military.

The house we currently rent costs $3250/month. It is 2 years old and worth $950,000. Say we wanted to buy it. We have no money for a down payment saved. So let's just mortgage the full amount, shall we? Including property tax and HOA fees, our monthly payment would be $6364.61 FOR 30 YEARS. Total housing cost excluding maintenance/upkeep would be just about $2.2 MILLION. That would translate to 56 to years of rental payments...

I mean, the house we rent costs $1000/month in property tax ALONE. $350 in HOA fees. I think we are actually making out like bandits living here for only $3250. I can invest the $3000 extra in the stock market (theoretically) and have an almost guaranteed 7% return. If I did that for 56 more years, I would have $35,685,504.00.

Tell me again how renting is stupid. Buying a home only makes sense if you plan to live in that home until you die, and you can pay off the mortgage as quickly as possible.

The housing market has a historical appreciation of 3% since it began tracking data. The stock market has outperformed the housing market at an average return of 8% since inception.

A house is a place to live. It is not an investment unless you own it and rent it out, thus putting money in your pocket every month. Otherwise it is a liability, a continued expense. Just like rent. Except most times rent is cheaper than owning overall. Renting is not throwing money away. It is paying for a roof over your head. No different than any other necessity.

 

[kimblebee]

True but u get nothing out of it
I will sell my house and gain the equity
Right now my house is worth close to $100,000 more than what i built it for 12 years ago
A washer, dryer fridge and dishwasher are nowhere close to that

I get peace of mind and that makes it worthwhile to us.

 

[Kingdome8]

I don’t think renting is a waste of money.
Homeownership has value if u stay in the house for a long period of time.

I feel the only real benefit to homeownership is that once u retire you don’t have a housing or rental payment. Which gives u more quality of life during the golden years. But again it requires u to stay a while.

 

[CdnCarrie]

You might think it's stupid but remember mortgages are 30 year commitments. You aren't just buying a house, you are also paying the bank approximately 4% interest, front loaded on the loan, maintenance and upkeep, and property taxes.

Not everyone has a 20% down payment for a house. Very few can purchase a home with cash upfront.

We have been renters for 17 years now. No regrets. We have moved 3 times in 17 years. We are military.

The house we currently rent costs $3250/month. It is 2 years old and worth $950,000. Say we wanted to buy it. We have no money for a down payment saved. So let's just mortgage the full amount, shall we? Including property tax and HOA fees, our monthly payment would be $6364.61 FOR 30 YEARS. Total housing cost excluding maintenance/upkeep would be just about $2.2 MILLION. That would translate to 56 to years of rental payments...

I mean, the house we rent costs $1000/month in property tax ALONE. $350 in HOA fees. I think we are actually making out like bandits living here for only $3250. I can invest the $3000 extra in the stock market (theoretically) and have an almost guaranteed 7% return. If I did that for 56 more years, I would have $35,685,504.00.

Tell me again how renting is stupid. Buying a home only makes sense if you plan to live in that home until you die, and you can pay off the mortgage as quickly as possible.

The housing market has a historical appreciation of 3% since it began tracking data. The stock market has outperformed the housing market at an average return of 8% since inception.

A house is a place to live. It is not an investment unless you own it and rent it out, thus putting money in your pocket every month. Otherwise it is a liability, a continued expense. Just like rent. Except most times rent is cheaper than owning overall. Renting is not throwing money away. It is paying for a roof over your head. No different than any other necessity.

I can't even fathom paying $3250 a month in housing costs. Yikes!
No one I know took 30 years to pay off their mortgage. Most people seem to get a 25 accelerated mortgage and pay it off in 21 years unless they upgrade to a larger house and take out another mortgage.
I can't imagine renting for 17 years, paying $3000 in housing costs and no savings.
Was rent that high everywhere you lived?
We live in a lower cost housing area so $900,000 homes are not the norm. It would buy a mansion here!
No HOAs in our province. Condos do have condo fees. Not sure if they are common in other provinces.

Your situation is so vastly different from my experience I cannot even compare it.
No one I knows pays anywhere near $3000 a month in housing costs.
I know one person who owns a house close to $900,000 and they put the equity of $400,000+ from their other house into it when they bought it.

Average home here is $250,000-#300,000. I have seen ads for rental homes for $1700 a month and always think you could own for less than that.