Rent vs. Buy: Consider Important Lifestyle Choices
Rent vs. Buy: Part 4 of 5
You’ve crunched all the numbers and determined you can afford to buy and maintain a home that won’t break the bank or derail your retirement plans. First of all, good for you! Saving all that money is a big step!
Now, you should think about whether or not homeownership is compatible with your ideal lifestyle. Just because you can purchase a house doesn’t mean you should. It’s understandable to want to make sacrifices for the sake of owning a home, but it’s also important to consider which are worth making and which will leave you unhappy in the end.
After all, everyone leads a unique lifestyle, and homeownership might not fit yours. Before taking the homeownership plunge, consider the following important lifestyle choices and what they say about the rent vs. buy decision:
Unless home prices are rising steeply (we don’t foresee that happening anytime soon), it usually doesn’t make financial sense to sell a home a few years after buying it—property is an investment, after all, and you can get more money out of it by putting time and effort in.
If you are uncertain about your job, would like the freedom to relocate for work or prefer not to be tied to a given city, renting may be the ideal option. In fact, renting allows you to maintain a more nomadic lifestyle for as long as you’d like. Until you feel that you’ve found the job, location and salary you’d like to hold on to for the long haul, avoiding the anchor that is homeownership is wise.
Location, Location, Location
While renters may be able to afford to live in their dream neighborhood, homeowners sometimes have to look to distant suburbs that might take them away from a quality of life that they love. Perhaps the neighborhood with the best schools for your kids is unaffordable if you buy, but attainable if you rent.
Maybe you’d really love to surf in the mornings, live close to work, or be near trendy shops and restaurants. Unfortunately, many of those amenities command sky-high housing prices if you own. And do you really want to swap access interesting art galleries and city parks for a bridge-club membership (OK, you might)?
If living in a certain neighborhood suits your lifestyle perfectly, moving away for the sake of homeownership may leave you feeling unsatisfied on a day-to-day basis. As they say, location is the key to finding a great place to live, and you’re more likely to find a suitable spot you can afford if you rent.
Even if you can afford the costs of homeownership, you should think about how “settled” you feel in your life. You might want to quit your corporate job and try making it as a musician. If homeownership makes you feel like you are a slave to a mortgage and that you can’t pursue dreams that will bring you real happiness, it probably is not right for you.
Additionally, having a mortgage is a huge financial burden, and money is the biggest stressor for most people. If dealing with the bills and loans you have as a renter feels like climbing Mount Everest, you may not be ready to introduce another financial responsibility to your life.
Assess Your Goals
The American Dream is whatever you make it, whether that’s renting to pursue other life goals or settling down in a suburb. Know where you are in your life and the things you want to accomplish before deciding if homeownership suits you.
Some goals might cost a lot of money, making buying a home a little more difficult. However, you should try to knock out the pricey things on your bucket list before you make the financial investment that is homeownership. Travel the world, start your small business or fund your big dream wedding, and then, if you want to buy a house, save for your down payment.
Americans are beginning to question the sacrifices that they make in order to own a home, and should consider if the trade-offs are truly worth it. It’s important to make sure that you don’t compromise the little things in life that bring you happiness, just so that you can have your name on a property deed. In the rent vs. buy debate, go with rent until you know you’re ready for ownership. In our next post, we’ll sum it all up.
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