I’ve been in the personal finance game for a little over two years now and it’s been a ton of fun. Many of my goals, during this time, have ebbed and flowed (much like my mother’s love for me), but home ownership has always been an urgent necessity. It would validate my significance and success in how I managed my money. At least, that’s what I thought.
Does home ownership really indicate one’s financial stability? For my wife’s parents it does. They own their home outright and it has significantly increased in value over the 20 years they’ve owned it. For the thousands of Americans facing foreclosure’s and short sales, not so much. “The American Dream” should not be owning a home, but owning a home when you can actually afford to own one. Novel concept right?
Renting seemed like the stupidest thing in the world to me. Why would I throw away $1,500/month, when I could own a home instead? Well, it turns out renting has quite a few perks of it’s own.
It allows me to put more in the savings vehicle of my choice. Taking on a mortgage forces you to save a sizable part of your income in your home, and as we all know, the real estate market is not always stable. I would rather throw $1,000/month away in rent and put $1,500/month in to my savings account, than just have a $2,500 mortgage.
It allows me total flexibility. If I get fired tomorrow, I am not limited to a 50 mile radius when hunting for my next job. Not only can I move wherever and whenever, but I can also determine how much I want to pay. If I ever feel like my rent is too high, I can always ask the landlord to reduce rent. How many homeowners can call their banks and say “Please lower my mortgage for no reason besides I’d like you to.”? And if my landlord says tough luck, I can pack my bags and begin looking for a new place.
But the real reason I most likely wont own a home in the next five years is this. It wont be a good time to buy one. If someone gave me $150,000 right now I’d sign a mortgage tomorrow. Unfortunately I don’t think that is going to happen. This means that I will keep on saving and saving and saving. Who knows where interest rates and home prices will be a few years from now, but if either are at crazy highs (to counteract the current crazy low) I don’t think I’ll be buying.
Renting isn’t a bad gig and one I won’t mind doing for a while longer. One day I’ll join the ranks of you homeowners, but I hope to do so at a time where I am financially able and at a point in my life where I am ready to commit 10+years of my life to one area.
Anyone else care to chime in with their two cents on renting vs owning? Do you think renting is “throwing” money away? For you homeowners, what lead you to the decision to quit renting and begin owning?
I think we can all agree that both renting and owning are stupid when compared to the third option…. living at home with the parents. You hear that Mom Ninja, the wife and I are moving in!!!! Muwahahahaha!!!!!