If you’re renting (or thinking about renting) an apartment or house, you’ve probably heard at least once that renting is a waste of money. Some people believe that pouring money into rent is silly when you could buy a house and put your money toward mortgage payments instead.
Is this true? Well, it turns out that the people telling you this don’t know absolutely everything about how life works. The answer of whether renting is a waste or not lies in your own personal situation.
For some people, renting is exactly what they should be doing at this point in their lives. For others, purchasing a home makes more sense. It all depends on the individual.
Here are some ways to determine whether renting is the right choice for you:
Look at Your Five-Year Plan
There are no scarier words than “five-year plan.” It’s the dreaded question of interviews, the idea you spend hours thinking about and the equivalent to “where is this going?” in relationships.
It’s okay if you don’t know exactly where you want to be in five years. Having some sort of an idea, though, might help you decide if you should be renting or buying.
For example, if you think marriage, a career change, travel, a big move or kids are in your near future, you probably don’t want to be buying a home that may not suit your needs in a few years. Instead, you probably want to start off by renting until the future is less hazy. This way you can reevaluate your needs and wants in a home before you make the big purchase.
Search the Savings
You’ll want to be fairly financially stable if you’re going to buy a home. So, if your savings account is low (or non-existent), purchasing most likely isn’t the right path. Having some savings gives you a safety net in case of anything unexpected so you can still pay your mortgage. If you’re living paycheck to paycheck, the last thing you want to worry about is mortgage.
A pretty hefty down payment will be necessary when buying a home as well. Without a considerable amount saved up, this won’t be easy to manage.
It will also be helpful to get your debt down as much as you can before trying to buy a home. This way, you’ll get lower interest rates. Interest can add up quickly, so in this case, waiting a few years and renting while you pay off some debt will actually be saving you money in the long run.
Ask Yourself If You’re Ready to be a Homeowner
While renting, you have a landlord overseeing your property. That means you have somebody to call when something goes wrong. Your landlord may even be paying for some miscellaneous costs like utilities and garbage. If you buy a house, it’s yours and yours alone. Any problems that arise are your responsibility, which could mean extra money or work.
Becoming a homeowner is a huge responsibility you might just not be ready for yet — and that’s okay. That’s why renting sometimes is a great first step.
The decision whether to rent or buy is an important one. Don’t let the mean man down the street tell you that renting is a waste of money because it might be exactly what is right for you at this point in your life.
Nobody understands your situation better than you do, so take a look at where your life is and what your financial outlook is before deciding if renting is worth it for you.