Home Ownership: Should You Buy Or Rent Your First Home?
Young people today are grappling with the question of whether they should buy or rent a home to start a family. For their parents it was a no-brainer – they got a job, saved a bit of money while they lived in a rental but as soon as they could they put down some money and took out a mortgage. Today it is not so easy. For one thing, incomes are lower than they were in the past – young people are making less today than their parents were making at their age. For another, young people are in a lot more debt today – the average college graduate owes tens of thousands in student loans. So, as someone who is looking to start a family, should you buy or should you rent?
Home ownership comes down to one thing – whether or not you can afford it. How much you make, your monthly expenses and how stable your job is all determine whether or not it is a god idea to buy a home today. This, however, is a short term view. If you think about it in the long term it is much better to buy a home than to rent. Simple logic can explain this. Imagine that you rent an apartment that costs you $800 a month in rent. In one year, you will have paid the landlord more than $10,000 in rent. Imagine if you were using this money to pay for a mortgage. In a few years, you would probably be all paid up and you would have an asset that you can truly call your home.
For many the issue of finding a lender is what leads to the decision to rent. Finding a renter is easy so long as you are disciplined about your spending. Remember the only thing that a lender wants to see is your ability to pay them back. So long as you are employed and you are not in debt you should have no problem finding yourself a mortgage. The thing to be careful about is debt. Many young people have no idea how the debt they are taking on will affect them when it comes time to make the tough decisions. Every time you are tempted to take on debt remember that it will only work against you if you are not able to pay it back. There really is no reason why you should own several credit cards when you can make do with just one, or drive a flashy car when you can drive something cheaper. There is no reason to eat out every night of the week when you can save money by preparing meals at home. It is the small decisions like these that eventually help you get a mortgage when the time comes.
There is another benefit to owning your own home. You can borrow against it once you have paid off some of your mortgage, which can help you get other projects underway. You can, for example, plan things in such a way that by the time you pay off a certain amount of your mortgage you can borrow against it and start a business.