Have you caught homebuying fever? Hold on a minute … Our very own Karen Carr explains why the grass isn’t always greener on the other side of the white picket fence.
The birds are chirping and the flowers are blooming — spring is here and homebuying season has arrived along with it. Have you caught homebuying fever? You could be enjoying the warmer temperatures in a new home that is truly all yours. Just picture the white picket fence, rocking chairs on the front porch, and window boxes full of spring blooms.
Not so fast. You hate to garden.
Take a deep breath. There’s no reason to jump on the homebuying band wagon if you’re not quite sold on the whole idea in the first place. Buying a home is a huge—potentially life changing—decision. You might not be sure about it right now (or ever) and that’s okay. Renting isn’t always a bad thing—even though it can get a bad rap.
So when can renting be a good option?
- You’re not quite ready to commit. The days of buying a home and flipping it for a quick profit seem to be behind us. Buy a home only if you can see yourself there for at least five years. If you aren’t ready to commit, renting is likely to be the more economical choice. You’ll avoid the headaches of the homebuying and selling processes and potentially save thousands of dollars in unnecessary transaction costs.
- You want more control of your budget. Renters avoid unpredictable expenses that derail the budgets of even the most meticulous homeowners. Repairing a damaged roof or replacing a water heater comes as an unpleasant surprise to most. Renting allows you to keep expenses stable since you are on the hook for rent and utilities, but not much else. Instead of budgeting for home maintenance and repairs, you can up your savings rate, repay student loans and credit card debt, or even just have more fun money in your budget.
- You don’t want the responsibility. Have you ever heard that renting is like flushing money down the toilet? Sure, you’re not building equity in a home while you are renting, but if that toilet ever gets clogged from all the dollar bills you’ve been flushing, you have the luxury of saying, “not my problem” and calling the landlord.
- You’re not sold on the long-term investment. The majority of mortgage payments during the first few years of homeownership go towards interest on the loan, rather than paying down principal. So its going to take some time for a new homeowner to see a return on the money they are putting into their home each month. However, you may be a savvy investor who is convinced that you can earn a higher return in the stock market than you’ll ever earn on the appreciation of a home.
Whatever your feelings about owning a home, avoid getting caught up in homebuying fever. There’s no rush to buy. Not because of current interest rate lows, not because it’s “homebuying season,” not because you’re reaching a certain age according to your mother, and not because you’ll lose out on the perfect house. (Guess what? There is no perfect house, anyway.)
Take your time and think about what’s right for you. Consider the pros and cons of home ownership and remember, renting is not always the obvious choice, but maybe it should be. Sometimes, it just works.
Karen Carr Brady is the founder of Simplie, a financial planning company that offers virtual appointments with CERTIFIED FINANCIAL PLANNER™ professionals. Karen is a former member of the Society of Grownups planning team and is now based in New York City. When she’s not writing about personal finance or meeting with clients, you can find her roaming around NYC looking for the best place to eat.
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While Society of Grownups hopes the information is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need recommendations geared to your personal financial situation, schedule time with a financial planner.