Renting Versus Buying: Which is Right For You?

Recently, my job has caused my wife and I to relocate to Jacksonville, Florida. It’s about 75 miles northeast of Gainesville, Florida. We currently own the condo we’re living in right now, and we’re in the the process of selling our condo. At first, we were all about buying a nice starter home in Jacksonville. The prices are not too high there, and there is a good deal of newer construction available. However, we started crunching the numbers, and it would be very tight to justify buying a house on my salary alone. We may not even have qualified for a mortgage. My wife is finishing her Master’s of Physician Assistant degree, so money is a little tight until she is done. We were a little bummed out, but we realized that renting might be the best option for us right now. Here are a few things to consider when thinking about buying versus renting a home:

• How long do you plan to live in that area? This was a big factor for us. We are not sure if we’ll enjoy living in Jacksonville yet. Plus, her first job or a better opportunity for me may come along and we may end up moving in two years. Buying a home can be a big hassle if you don’t plan on living there for at least three years.
• Consider what costs go into buying a home. When figuring out if you can afford a house, you need to consider much more than the mortgage payment. You need to factor in homeowner’s insurance, property taxes, maintenance, closing costs, furnishing a bigger place, and making any renovations wanted for the home. Owning a home is very expensive. It’s worth it in the long run, but again, it’s not a short-term solution in a normal housing market.
• Are you financially ready to buy a home? You need to have some money in the bank before thinking about buying a home. You need to have enough for some kind of down payment, an emergency fund for emergency household repairs, and extra cash for routine maintenance of your home and property. We were banking on our condo to make a decent profit to have enough money for a good down payment. However, we would not have had much of an emergency fund to pay for unexpected expenses. That was another reason we decided to rent for a little bit.

If you are a visual person and you like numbers, Here is a calculator that helps you figure out if it is mathematically better to buy or rent.

Buying a home is the American dream. I think everyone should strive towards homeownership at some point in their life. However, all too often people get in over their heads when buying a home at the wrong time in their lives. Renting should not be a long term solution. It should be a temporary solution until you are in a financial situation to buy a house with a down payment of 10% to 20% and at least a couple of thousand dollars left over for house repairs and maintenance. Sit down and put together a plan for saving to buy a house. See how much you can put away and how long it will take you to reach your goal. If it ends up being longer than five years, then come up with some creative ways to earn some extra income to speed up the process. Before long, you’ll in a nice house, and you’ll thank yourself that you didn’t buy one when you were broke.

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