Posted on Monday, September 20, 2010
Some pros and cons:
Renting is easy in and easy out. That’s important if you may be changing jobs or having more or less people live in the home. You’ll need to stay put for at least five years in order to re-coup the purchase and sale costs if you plan to own. So factor that into your cost. The NYT website has a good resource for the exact numbers by region. Also, if there’s a repair to be done and you rent, it’s the landlord’s problem. Most folks spend 1 to 2% of the value of their home each year on maintenance. Finally, if you have poor credit or no down payment, renting may be the way to go.
On the other hand, mortgage rates are low. Every percent you save on the mortgage rate translates to 9% more you can spend on the purchase price if you want. Homes in nicer neighborhoods tends to be for purchase, not for rent. And in particular in the better school districts. And once you find the schools you like you wont have to move if you own. My favorite is that owning a home is like having a forced savings account, Sure there might be better investments dollar for dollar if you can find them, but renters tend to not save. If you treat your home like a piggybank, and not like and ATM, you’ll be set for retirement.