We live in a financial world where renters are looked down upon by their ‘superior’ house-owning friends.
Unfortunately, before long renters start to listen to the lies homeowners tell.
Two False Reasons People Say You Must Buy a House1. First Home-buyer tax credit of $8,000
Quick. Time is running out. Go buy a home and save $8,000. While that might sound like a Real Estate commercial, it is actually a stimulus program currently offered by the US government. While the $8,000 credit sounds appealing, you should only buy a house when the time it right.
How do you know the time is right? Ask your checkbook. If you make a preemptive move to buy a house before you are ready, you will pay more than $8,000 worth of regret, stress, and possibly even interest payments.2. Homes make a good investment
Truth. Homes are only a good investment when the value of the home increases.
Truth. Home values occasionally decrease.
Your solution – make your home a home and make your investments an investment.
The primary function of a home is a place to live. If you make a profit when you sell your house that is great. Too many homeowners become real estate speculators instead of house shoppers.
The decision to buy a home involves more than an online calculator. Be skeptical of any generic online information. Why do so many people entrust their lives to a few numbers that a calculator spits out? The lie is that if it makes sense on paper – if the math adds up – then it must be the best decision for you. This, however, is not true. People who only follow the advice of others will continually make bad money choices.
It is not bad to rent a house or apartment. There are advantages of renting an apartment instead of buying.6 Advantages of Renting
- You budget is more predictable. Homeownership lacks predictability. You do not know when the hot water heater will break, when termites will infest your home, or when your foundation will crack. Each of these emergencies require money to fix. When you rent you pay a set dollar amount every month. Regardless of the repairs needed you still pay the same amount.
- You have time to save up money for a down payment. You need to be disciplined in order to do this so perhaps every month you should set up an automatic deposit into a savings account. In the long run this could provide some significant interest payment savings.
- Flexibility. When you are first starting out your marriage it may be difficult to know where you will settle long term. Renting offers the opportunity to move as needed and when needed. You might not be planning to move, but as a renter that becomes a more viable option.
- Less Responsibility (apartment). This may only apply to apartments, but I miss the days when the lawn and the repairs were someone else’s responsibility. I enjoyed just leaving town without needing to find someone to watch the house.
- Emotional Peace. I have debt allergies. I love the debt-free lifestyle. The idea of having a debt (yes, even a “good debt”) doesn’t sound appealing. So many people have so much debt that they are upside down. So many people complained and suffered when housing prices dropped. These are all concerns that the renter avoids. How do you put a price tag on emotional peace?
- Time to get smart. I made some dumb money decisions when I was first married. Looking back now I’m actually amazed that I didn’t make worse choices. Renting gives you time to grow a brain before you buy a house. Renting allows couples to get a clear sense of what they want to own and how much they want to spend. Some lessons can only be learned with time.