It has often been said that buying a home is the smart move financially, because if you rent you are just throwing your money away. As the economic landscape has shifted in recent years, that conventional wisdom has been called into question. Is buying a home really the smart move?
For starters, today’s economy requires much more flexibility from job-seekers. In order to find a job, you may have to move across town or across the country. If you’ve just purchased a house, the ordeal of having to sell might be enough to keep you from taking a job you want or need, and even if you do sell you might lose money in the process.
Home prices are on the rise and the economy is in flux. Even if you’re relatively certain you’ll stay in the same area for a long period of time, you won’t start to see the benefit of buying over renting for several years. This is because you pay most of your interest at the beginning of your loan and you won’t really start to build equity for five years in most cases.
Another consideration to make is that, as a homeowner, you are solely responsible for home repairs, taxes, insurance, and fees. These expenses can really add up, and if you have multiple major repairs in a short time-frame your finances can take a major beating.
There is one thing that renting can never outdo buying on, though, and that’s freedom. When you own your own place you can generally do with it what you’d like, whereas a landlord might be picky or strict.
For more about the considerations to make when deciding whether to rent or buy, check out this infographic. Buying a home is still a solid choice, but you should be informed about the risks before you get started.