Five Very Good Reasons to Keep Renting
By: Bean Jones
You Can't Hurry Housing. If you can't afford the house you really want in the neighborhood you like, it's best to rent until you find real estate that fits your life right.
I've been thinking about some grown-up stuff lately. High up on my list is my desire for a permanent address.
Here and There
You see, in a span of 10 years, I've lived in five places in two states. My family, who has lived on the same street since the 1970s, sees this as a sign that I haven't grown up yet. My mother--a Brooklyn native--also complains about having to update her address book for the nth time.
So, with my finances now relatively stable, I started looking around the neighborhood. It's been ten months now and I haven't found anything I liked and could afford. The ones I could afford didn't look promising and the ones I did had price tags that made me lightheaded.
Buy or Rent?
Then again, is owning a home always the best thing?
To get an objective answer, I sought out an expert who would remind me of my mother but wouldn't be as bossy as she is. (Sorry, mom.) Finance columnist Laura Rowley, author of Money & Happiness: A Guide to Living the Good Life, fit the bill. Reading her book, I found her simple-yet-spot on financial advice very helpful.
Solid Reasons
Rowley lists five excellent reasons that would make tenants everywhere feel good about their decision to hold off on being homeowners. According to Rowley, it's best to keep renting if...
1. ...your rent is at least 35 percent less than what it would cost you each month to own, including mortgage, property taxes, utilities, and such.2. ....you don't have the time, money, or desire to attend to problematic plumbing, erratic electrical wiring, and other domestic glitches.
3. ...your total debt (mortgage, credit card payments, student loans) is more than 40 percent of your gross income. For instance, if you earn $80,000 a year, your annual debt payments shouldn't exceed $32,000.
4. ...you plan to relocate within four years. In most cases, real estate prices don't rise fast enough to cover the costs of buying and then quickly selling. Once you add up all of the attorney's charges and other transaction fees, it's an expensive process.
5. ...you're not excited about either the home or the neighborhood you can afford.
These are very good points to keep in mind when you feel that your desire to put down roots may cloud your judgement. They sure convinced me to wait it out until I find a place that I would love calling my own for a lifetime. As Rowley says, "Happiness trumps housing."
Credits: Photo by Donna McNeely, courtesy of Public Domain Pictures.
Comments
If you wait for the perfect house before you buy, you'll never buy.
I was really fortunate with this house. Not only was it the first house I looked at, but it was very close to all the sketches I'd made since childhood of the house I wanted. I knew as soon as I walked in and saw the tongue-and-groove pine walls throughout the house that I wanted it. Within hours, I signed a purchase agreement contingent on everything checking out and getting financing.
I spent nearly a year getting my mobile home sold, getting financing, and waiting for FHA approval. I was fortunate the buyers were willing to wait that long, and also fortunate that my parents (who took the loan out in their names) had perfect credit since the cost ($18,500 - in 1985) was too low to go through a traditional bank and I had no down payment.
Was it worth it? ABSOLUTEY! Even after having to move away from here for 10 years due to health reasons, I knew I'd never be totally content until I moved back.
I'm also really lucky because now I have a house with a fixed 8.5% interest loan, payments of only $257 a month (that's total - principal, interest, taxes, and insurance) in a summer resort where my neighbors houses are renting for twice to three times what my mortgage payment is - and most of their houses are less square footage, only two bedrooms while mine's three...and they don't have the tongue-and-groove pine wood walls that even the emergency crew (when I thought I'd broke my leg) oohhed and awed over.
You don't need the PERFECT house, you need a house you will be comfortable living in, at a price you feel comfortable paying...for what may be the next thirty years.
Basically I would prefer owning my home, the moment I have saved 20 percent down payment. However I find the 5 reasons mentioned above to be solid ones to continue renting. Very simple -but to the point!