Congratulations! If you've stumbled across this blog, you're exploring the fun world of homeownership. You're also probably asking yourself the question, "Should we buy or should we rent?"
Even if your end goal is to own a home, this is still a great question to ask.
And before we get too far, you don't have to buy a home. If the best decision is for you to rent, that's great! If it's homeownership, that's great too. There's not a right or a wrong situation, and ultimately, you have to do what's best for you and your relationship.
We rented for our first year of marriage and bought a home about six months after that (plus an extended stay with family, but that's a story for a different day). We had to decide if we would rent or buy and then had to decide when that should happen.
In this post, we're going to share with you our process for making that decision and help you make it for yourself.
First, let's start with some baseline questions. The answer to these will help you later on, so before you skip ahead, press pause and go over these questions with your future spouse.
Many couples make the mistake of looking at just two costs associated with homeownership: the mortgage (or monthly payment) and the down payment. The reality is, buying a home has many more associated costs. Here are just a few:
Those additional costs can quickly add up to be far more than you budgeted.
The cost of renting is pretty straightforward. Generally, the cost of rent is what you can expect to spend each month. In addition, you may end up adding fees like renters insurance or a deposit.
Only you can determine which of these costs makes the most sense for you. This calculator from Smart Asset can help you determine whether renting or homeownership might make the most sense for you.
Arguably the most important factor to deciding whether to buy or rent is how long you plan to stay in a specific area. Generally speaking, if you're going to live somewhere for a year or less, renting will probably be your best option.
All told, the upfront costs of finding a house and taking out a mortgage can be in the tens of thousands of dollars (or higher). As a renter, by contrast, you'll likely just have to pay an application fee, fork over a broker's fee and make a refundable security deposit of a few months' rent. (smartasset.com) Having to go through that process year after year will get costly.
In contrast, if you plan on living in the same area for 5, 10, or even 20+ years, buying a home may end up being cheaper in the long run.
Let's end by taking a look at some pros and cons to both homeownership and renting. This is by no means an exhaustive list.
Pros of Buying
Cons of Buying
Pros of Renting
Cons of Renting
So... should you buy or rent? As you can see, the answer is often, "it depends." While this post probably didn't give you the definitive answer you're looking for, hopefully, you got some helpful things to think about.
Have a question about renting vs buying? Shoot us a DM on Instagram @loveyourfirstyear.
