There's nothing like owning the roof over your head and the floor beneath your feet. Having a bunch of walls in between is even better. Although there are those who prefer the modern-loft lifestyle.
But purchasing that mass of lumber, pipes, wires, and glass -- and possibly the surrounding land and air space -- is a huge financial endeavor. If you have a yen to become part of the landed gentry, the first question you should ask yourself is: Should I? (Don't ask it too loudly, or people will point.)
Here are some things to think about to solve your renting vs. purchasing dilemma:
Why you should rent
- You don't think you'll stay in the area for more than three years. The thousands of dollars of upfront costs related to buying a house (lawyers, brokers, local government -- they all get a cut) will be wasted if you move after a short time.
- You don't want to worry about making repairs. When the toilet explodes, it's the landlord's problem, not yours.
- You don't want to take on a mortgage. Most people have to borrow tens of thousands of dollars to purchase a home. That can put a lot of limits on you for a long time. However, if you rent, you're free of that enormous debt.
Of those points, the first one is the most important. If you're the ramblin' type -- moving from town to town, breaking hearts along the way -- then buying a home may not be worth the time and money.
Now the other side of the housing coin:
Why you should buy
- Your monthly housing payments line your pockets, not the landlord's. It might not seem so lately, but a house usually increases in value over time. That means you may make a profit when you sell the house. Also, you can use the equity in your house for tax-deductible loans. And speaking of taxes ...
- You get a sizeable tax deduction. Uncle Sam likes homeowners -- they make a country more stable, or something like that. Anyway, to encourage ownership, Uncle Sam allows homeowners to deduct from their income taxes the interest on their mortgages and other related costs.
- Your housing payments are fixed. Assuming you get a fixed mortgage (the most popular kind), your housing payments will not change as long as you own the house. If your mortgage is $1,200 a month now, it'll be $1,200 a month 15 years from now. On the other hand, if you're renting your residence, your rent check will probably increase every year, and could be 30%-50% more 15 years down the road.
- You love worrying about repairs. When the toilet explodes, there goes your Saturday (after you explain to your kids that flushing Fluffy down the john is not a proper burial for a deceased hamster).
- You own the place. Put Velcro on the ceiling. Carpet the bathtub. Prune your bushes into the shapes of candy canes. Hang so many pictures that no one could guess the walls' paint color. Go crazy -- it's your house!