Financial Planning & Coaching

To rent or to buy? So many opinions all over the place! I’ve been a landlord and I’m a homeowner as well. I rented in my younger years and homeownership by far outweighs renting! When you rent you’re giving your hard earned money away to someone else and you’re making them richer. When you buy a property to live in the money you pay monthly is essentially paid to yourself!

Some say renting is better because they do not have to worry about repairs and things that happen to the property they live in. This is by far a more expensive option in the long run. When you rent you’re paying off someone else’s property for them. Your hard earned money is going to benefit someone else in exchange for residing in their property. So many opinions out there about whether to rent or buy! I’m going to tell you why buying is FAR better than renting in ANY market. Here’s why:

1. When you rent you pay a higher price than you’d be paying if you were paying on a mortgage that’s your own. No landlord is going to agree to rent a property for less than the payment they owe on it. Renting requires you to pay a higher price per month than if you were paying a monthly mortgage payment on the same property.
2. Some say they rent because they don’t want to bother handling repairs themselves. Yes, this is a convenience for sure, but in the long run you’re giving away your money and you have nothing in return for all the payments you’ve made over many years. You’re left empty handed!
3. Buying in essence is PAYING YOURSELF because you’ll get that money back in one way or another. If you choose to sell, you’ll walk away with a good amount in your pocket to use for what you choose to use it for as long as you’ve taken care of the property. This means you eventually get all those monthly payments back! Making mortgage payments is like an investment even though you’re paying some interest to the bank because you should get it all back years later plus the amount the property rose in value. Properties can rise in value at different rates for sure, but usually if you’ve lived in a property at least 5 years or more you should walk away with money in your pocket if you sell.
4. Buying a property to live in allows you to write off interest when you do your taxes. This is a financial perk to buying for sure!
5. If you live in the property you bought long enough to pay it off you get to experience what it’s like to live without that giant monthly mortgage payment! Imagine what you could do if you didn’t have a rent or mortgage payment! It’s a game changer! It’s very freeing! You also have the option to rent the property and make money on it for years to come. This is a semi-passive income. What you make in rent can make the payment for you on another property. You can choose to sell it and use that money to move somewhere else. So many choices! It’s great to have choices isn’t it!
6. Home repairs do cost money, so having a certain amount of savings built up is smart before you buy. Emergencies will come for sure, but they’re not as big of an emergency if you’ve planned for them financially and have a way to pay cash for the repairs needed. Yes, homes eventually need new roofs, HVAC units, water heaters and a laundry list of other repairs, so planning for them in your monthly budget is helpful and can keep you from going farther into debt.
7. What about high interest rates right now? Shouldn’t I wait to buy until they come down? Yes we ALL want the lowest rate we can get, of course. The market seems to have a regular ebb and flow to it. When interest rates are up, prices are lower. When prices are high, rates are lower. In 2020 we saw record low interest rates and housing prices skyrocketed! You can refinance when interest rates come down again, so buying at a high rate isn’t forever. So there’s no perfect time to buy a house, but i will tell you that buying sooner than later pays off faster! The quicker you begin paying yourself the better off you are.
8. Buyer beware of the ARM! An ARM is an adjustable rate mortgage. This means the rates ebb and flow with the season and your rate is adjusted. This makes me cringe! I will ALWAYS choose a fixed rate mortgage over an ARM even if the ARM has a lower rate! Interest is money we pay someone else in exchange for buying something right now. I don’t need my payment to skyrocket because interest rates go up. It’s a horrible feeling.
9. Bottom line: Renting is paying someone else and buying is a form of investing. Renting is giving away your money and buying is paying yourself in the long run.
10. Meeting with a finance coach can help you have peace of mind about when you’re ready to buy a home. You’ll leave your session having decided what price home you’re in search of and what your finances will look like. We spend time organizing our closets and kitchen cabinets. We need to spend just as much time organizing our finances! It will pay off in the end! STOP renting and BUY!