You’ve probably heard all the arguments for one side or the other. “You’re just throwing your money away if you’re renting.” Or “owning a home is such a money pit.” So which is it?
The answer is, of course: It depends. Also, to be clear, we’re talking about buying a home you plan to live in, not an investment property. That’s another article for another day.
Buying a home is a huge decision. It can feel like all your friends and coworkers are doing it, that everyone around you is nudging you to go for it, but the more pressure you feel, the more you should take a step back and ask yourself if this makes sense for your life. And of course, the other big question: Can you afford it?
For the record, renting is not throwing your money away. All that money I paid to keep me out of the rain and cold all those years was not garbage money. Keeping a roof over your head is, in fact, a very, very good use of money.
Here are some questions to help you decide whether you should buy or continue to rent, explained below:
Do you plan to stay in the same place for at least the next seven to 10 years?
If you think buying a home is a pain in the ass, wait until you have to sell one. If you’re not sure where you’re going to be in the next few years, consider holding off on buying a place until you’re prepared to settle into a place you can afford for the next decade, so you don’t have to wonder if you have to sell at the “right time.”
Are you prepared to change your lifestyle for the long term to save towards a down payment?
Don’t worry, you can still have avocado toast while you’re saving for a home. What you may have to give up are weekend shopping trips, annual vacations abroad, and not having a roommate.
When you start seriously considering buying a home, it’s a decision that will be years in the making. Unless you’re totally rich (*lowers hand*), practice what it feels like to save $1,000 per month and imagine having to do that for potentially the next two to four years. Ouch.
Do you have other goals that you’re more compelled to reach sooner?
Buying a home is a big goal. So is deciding to start a business, go back to school, change careers, or start a family. If there are other life decisions that feel like more of a priority, it’s OK to put off buying a home in lieu of accomplishing these other milestones.
Why do you want to buy a home?
“Because it’s a good investment” is not a good enough answer. It will not get you through the years of giving up other things you love in order to one day buy a really expensive thing if you don’t actually care about it. It is a good investment, but be honest with yourself.
I lived with two roommates for five years (in the *small* room), saved for four years towards a down payment, and made a conscious choice to keep working at a stable job longer, all throughout the home-buying process.
I had to delay other things—including starting my business—because I knew I wanted to buy a home in Brooklyn. I wanted to stay in NYC long term, put down roots, and be able to stay in the neighborhood I’d come to love.
The point of having money is to spend it on what you value, and when you’re clear on that, it doesn’t matter what you should do—it only matters what you want to do for you.