Rent, Buy or Live with your Parents
- Kate Homme
- May 1, 2017
- 2 min read
Everybody's got to live somewhere- unless you're like my brother Clayton, who has been sleeping on couches since 2013. But besides those gypsies, everybody needs a place to call home. Here is a ready made list for helping you decide how to proceed with choosing a place to live.
Buy
Pros
You're paying yourself as opposed to someone else.
Higher standard of living: renting covers the cost of the homeowners mortgage, the property management fees, additional pet fees, and probably some positive cash flow for the owner as well. You will get a better home for the same monthly price if you buy (not taking into account the down payment).
You can customize your own home.
Tax benefits
Cons
Potential repeat of the 2008 Mortgage Crisis where your house quickly looses value due to the improper management of the mortgage market.
You have to fix your own problems
You become an official adult.
Rent
Pros:
Less Stressful
Security Deposit < Mortgage Down Payment (unless using VA Loan)
Cheaper maintenance costs
Less complicated Tax Returns
Easier Exit Strategy
Build up your credit month to month
Cons:
...See all Pros for buying a house
No Pets?
You're doing nothing to diversify your investment portfolio
Be a Freeloader
Since my parents are probably the only people who read this blog I can't exactly list out the pros and cons for real... but we all know them...
Also please see below for the pictorial definition of a freeloader:
Still can't decide?
Check out the houses in your rental market. Find an available house that you would like to rent. Then find a comparable house (same area, features, lot size, etc.) for sale and input both of those values (monthly rent price and listing price) into the below link to find out the financial risk:
http://www.realtor.com/mortgage/tools/rent-or-buy-calculator/
This link only calculates for buying a house using a conventional loan, ie having to put a 20% down payment. If you are eligible for a VA loan or can use an FHA loan you will be able to subtract that down payment out of your total costs (meaning it will be even cheaper to buy). This also does not take into account the tax benefits of home ownership (later blog post).
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