Buying a house versus renting

[dayslover]

This is my 1st time on here. I hope that I picked the correct category to write this.

Anyhow......

I keep getting confronted with the issue of purchasing a home. My husband and I have been married for 4 years and are just not ready to buy a house (or condo). We are happy in the neighborhood we live and with our townhome. We live in a country type setting that is just on the outskirts of some big cities. The community is wonderful. The homes here are expensive and a lot of wealthy people tend to live on the lakes out here. The school system in this community is one of the best in the state. We have a 2 bedroom (2 floor) townhome (with a preschool aged son). We have an attached garage (we do not share it), our own private entrance, our own full sized washer and dryer, 1 1/2 baths, breakfast bar, dishwasher and patio. We never hear our neighbors either. The property that we live on has lots of backyard for our son. There are 2 playgrounds, basketball courts, tennis courts, baseball diamond, gazebo for throwing parties, beach type setting, outdoor pool and man-made lake with an island in the middle of it. We really love where we live. We used to live in the apts. on this property, but moved into the townhome last summer. All I heard was "why don't you buy a house, it'd be cheaper". We pay $770. Everyone that I know pays over $1,000/month for their mortgage, AND they don't even live in as nice of a community as I do. We do not have money for a down payment. In fact, we can't afford to shell out another couple hundred dollars a month to purchase a house. Not to mention, that we would need to save money each month, in case something went wrong and we needed a new roof, furnace, stove or whatever else could break down. Plus we would need to start mowing our own lawn and all that good stuff. I realize that people are thinking about the end result of building equity and making money, however, right now I am saving myself at least $400/month, probably more. Also we would not want to purchase a home in another neighborhood just to say we own our own home. The homes out here are at least $300,000 or more. We'd be lucky (in the future) to be able to afford one for under $200,000. In other words, we are happy with renting. We do not look at it like we are wasting away money, but as if we can't afford to own right now. My question is: what do you say to people (besides it's none of your business) when they tell you that you should buy versus renting or ask you why you don't own your own home? I usually tell them that we either can't afford to or that we aren't ready yet. I always feel so uncomfortable with this subject. Somebody please help me!

[boedicca]

It's your life. You don't have to justify or explain the decisions your husband make. If I were you, I would just smile and say" "Thank you, but we are very happy living where we do." And then I would change the subject.

[tinhorn]

Have those homeowners do the math - total their payments over the life of the mortgage and see how much they're paying in interest, or calculate how long it takes until more of their payment goes to paying down the loan instead of covering interest.

[cajunfoodlover]

While in theory, in the long run, I'm saving money on the mortgage because I'll be able to sell the place for a profit, it's seriously impacted my financial situation. I pay a lot more for my mortgage that I did in rent, live further out, and commute longer, although I have a nicer place.

What really gets you though are the expenses, not the mortgage and down payments.

For instance--just the other day I had a pipe explode. Lovely stuff. Couple thousand dollars worth of plumbing fees, water damage repairs, etc, all out of my pocket. Homeowners insurance should have covered part of it, but because of confusion with my mortgage broker when I set it all up, I didn't have the correct kind of homeowners coverage. Condo association should in theory cover some things like this, but because of where the pipe broke, it was technically my problem, so not a dime from them either. And of course there's the whole having to take time off of work to clean up, deal with the repair people, etc factor.

There are perks, but there are a lot of things to consider that many people don't. When the toilet stops working, you don't call the landlord, you break out your tools and hit Home Depot. When a light fixture blows out, you don't call the landlord, you call an electrician and pay out of pocket to fix it. When a pipe breaks...well...you get the idea.

[Mystlet]

Obviously there are perks to owning, or landlords wouldn't make any money. However, there are a lot of costs & responsibilities with ownership. Renting is nice for those who don't need/want the hassles.

[boedicca]

It's a personal decision. Not everyone has the same values, resources, life situation, and life goals.

[Mystlet]

I imagine I'll rent when I'm a little old lady & don't need the hassles of maintenance to worry about.

[boedicca]

If one owns one's place outright, one can use the money that would have been spent on rent for upkeep - and not have the threat of eviction / rent increases.

[Mystlet]

Meh, when I'm eighty I don't want to wake up to find the roof caved in because I'm covered in snow.

[boedicca]

I'm going to live dangerously and stay in my near-an-earthquake-fault house.

[PlatyGuy]

In general, owning is more beneficial financially than renting. Yes, you pay a lot in interest, but any amount that goes toward equity is more than happens when renting, plus you get a bigger tax break. Maintenance also costs time and money, which is why I agree with boedicca that it's a choice. My wife and I probably spend less in payments than we would pay in rent for the same space, but I swear sometimes I'd chuck it all and pay more if I could just forget about the twenty chores and five kinds of contractors that always seem to be on my to-do list. I have to call an arborist soon, ferchrissakes, just to make sure none of those trees drop a limb on the house or on someone's car. Grrr. I just keep telling myself that I'm effectively being paid for that time and aggravation, in the form of a valuable home that I can sell to some other poor sap some day.

That said, I don't think anyone should be pushing home ownership too much right now. Never buy when the bubble's at its biggest, and that's pretty much the case right now - especially in the more expensive markets. Nobody can predict when that bubble will burst, but nobody wants to be holding a fresh mortgage when it does either. If it were me, right now, I'd tell people that I'm waiting for the housing market to correct itself so I can snap up a bargain. Maybe even a repo. Maybe theirs.

[minni_the_minx]

My personal view is that renting is dead money, your paying someone elses mortgage for them. A mortgage is expensive to begin with, however, over time it gets easier, the rent will increase year on year, but not a mortgage except for variations in interest rates and eventually you will own your home out right, unlike the rented property.

[Dr_EluSivE]

I will rent until i have the cash saved up for a suitable down payment then i plan to buy. I want to build equity in a house, and i really just like the idea of being a homeowner. I have looked at some houses both rentals, and houses for sale, and in some cases you can buy a nicer home for less then the rent. Granted there could be some things that cost you maintence wise, but i am do it yourselfer so i dont think it could be THAT bad.

Dr.

[tinhorn]

Do-it-yourselfers can often snag a bargain. Some of these can't be financed, so the seller will carry the contract. When I sold real estate and had a seller wanting to sell on a contract, I told them they could pick any two - get their price, get their interest rate, or get their term. Not all three - just two.

I bought my last two homes cheap, with low downs and seller contracts because they were fixer-uppers.

[kalea]

You should not be bothered by those kind of people. Based on their experiences some are just concerned because having your own house really is a very good investment.....

[Fidget]

I think if you can buy and put your money into yours rather than rent and put your money into theirs, they you ought to.

So I'm the person you are asking how to deal with.
If you want to shut me up you say "We sat down with all the facts & figures & and made a decision that works best for us."

[Cd.]

You will never know what hell is like until you own a home. Personal experience talking here. Just be ready to shell out the bread once you buy a home.

If I could do it over again I would buy a condo.

OH... and be very careful of mortgage lenders. Some are ok but others are absolutely evil. Be sure to read everything before you sign. And don't let the bastards tell you to hurry up.

My advice, take lots of time, save your money and only buy when you are ready. If possible, try to borrow from a mortgage banker and not a broker. And try to arrange your mortgage seperately from your realtor. Look for a fixed rate mortgage and not an adjustable.

[jojo]

Originally Posted by Criminal

You will never know what hell is like until you own a home. Personal experience talking here. Just be ready to shell out the bread once you buy a home.

It's a pit baby.

[dayslover]

I appreciate all of your opinions on this subject. I have found that quite a few of you have mentioned that buying a house can cost less than renting. Now in the end, when your house is paid for, maybe it would be less. However, I live in WI and if my monthly mortgage cost less than $770, I'd be living in the ghetto. For a house in a decent neighborhood where I'd feel safe having my kids grow up, I'd be shelling out at the minimum of over $1200/month. I'm talking for a typical ranch 3 bedroom, 1 1/2 bath. The houses here in decent neighborhoods are at least $130,000. Anything less and you're either getting a money pit or the neighborhood is horrific. I know someone that lives in KS and paid $40,000 for a decent home (so she says). Maybe it all depends on the state where you reside and such. I personally don't have the extra $400 plus a month to afford a monthly mortgage payment.

[BooRadley]

Don't buy until you're ready. Also, nationally, prices will probably drop for a few months, then stable out, then rise slowly, so you might be better off waiting a while, anyway.

In the long run, though, you're friends are right about the economic advantages of owning. It's a big step and can be scary, but it's the best way to go over a lifetime. Someday you're going to be retired, and you're really, really, really wish you didn't have to pay rent.