Should Your Job Determine Whether You Own a Home vs. Rent? Dave Ramsey Says Yes

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  • It's a big myth that renting is a waste of money.
  • Depending on your job situation, renting could be a better choice than purchasing a home.

Depending on what you do for a living and how you do it, renting could make more sense.

There's a reason people are often eager to stop renting as quickly as possible and buy a home instead. When you rent, you don't get to build equity in a property of your own. Rather, those monthly payments you send in achieve the purpose of helping your landlord pay off their mortgage.

On the other hand, once you buy a home, every dollar you put into your mortgage gets you closer to owning that property outright. And as you build equity in your home, you can borrow against it as needed or eventually sell your home at a profit if market conditions allow.

But if you're going to buy a home, you need to make sure you're in the right place financially and logistically. For the former, that means having funds for a down payment, additional funds left over for upkeep and home-related emergencies, and a high enough income to keep up with ongoing housing costs.

For the latter, you may want to wait until you're settled in a job that has you in the same place all the time to buy a home. And if not, financial expert Dave Ramsey says you're probably better off waiting.

Your job should factor into your decision

Some people's jobs have them reporting to the same physical workplace for years on end. But other people's jobs require them to move around a lot. And if you're in the latter situation, then Ramsey says you're probably better off renting a home rather than purchasing one.

The reason? When you take out a mortgage, you sink money into closing costs, which can amount to up to 5% of your loan value. That's a lot of money to recoup.

Normally, you need to stay in the same home for several years to recoup what you spend on closing costs. But if you expect your job to force you to relocate in two years, or every two years, then buying a home may not be worth it.

Similarly, if you're in a stable job but are looking for a new one you might have to move for, then you're better off waiting until you're settled in to get serious about house hunting. There's little sense in buying a home in Chicago if the best opportunities in your field are in New York, and you know you're willing to move there.

Ramsey points to members of the military as a prime example of people who may want to hold off on buying a house due to their job. Military members are often uprooted every few years, and so in their case, renting may be a better option.

Are you in the right place to buy?

Owning a home can lend to more stability -- both financial and logistical. But if your job has you relocating all over the place, then the home you buy may not do you much good. Quite the contrary -- you could end up losing money by purchasing a home and then having to sell it a couple of years later due to a change in your job. So if your line of work has you perpetually on the go, Ramsey insists that renting may be your better choice.

And to be clear, in that case, renting is not a waste of money. Maybe you're not getting a home you own yourself, but you're putting a roof over your head. And that definitely counts for something.

Our Research Expert

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