Studio Chat: Renting vs. Financing a Home Purchase

STEPHEN SMALENBERGER, EA & MICHELLE SMALENBERGER, CFP®

One question we get a lot is Do you rent or do you buy?  We’ve done both; rented and now own a home.  There’s such a simplicity in renting!  You know what your fixed costs are each month with no other responsibilities if something breaks or needs replaced.  Then there is thinking when you own that you can invest your own money into making your own home what you want.

We remember that once we bought our home it did feel nice to own our home and know that we are working to pay off the mortgage month after month.  It is an investment that you are making.  But you really want to be thoughtful of what’s going on in your life.  Do you have time to be taking care of your home and if something happens you’re the person on call?

For those who are thinking about buying a home and want to own, how much should you be considering putting as a down payment?  A great goal is to be able to put down 20%.  This helps you to know that you have a good amount of equity in your home already, meaning that you have less to pay down on the mortgage.  If housing prices fluctuate you don’t have to worry that you’ll be underwater on your mortgage and owe more than you can sell your home to pay for.

When looking for a house, set up an online search so you can look for features and must have items that you desire in your house.  Before we ever got our realtor involved we drove to look at probably 100 houses on our own.  Once we drove by the house we had already decided we didn’t need to see the inside.  That sure saved a lot of our realtor’s time.

Another great thing in renting is that you have time.  You can decide what neighborhood or community you want to live in or near.

Be sure to take the time to think through what is best for you so that you aren’t living someone else’s dream.

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