Own vs. Rent

[Kermit]

We own. I think owning makes sense if you're financially secure, but it's not a good option if you're struggling financially. We wouldn't own unless we had enough to pay 20% down, could afford a 15 year mortgage, and had 6 months' expenses in savings for emergencies. And that's for a newer house. If we bought an older house that would likely need repairs, I'd have an extra $5,000-$10,000 dollars on hand for emergencies.

 

[frndshpcptn]

I rent at the moment. I have a good deal ($2100 for a 1 bedroom) and can't afford to buy anything in Manhattan right now that would be in a safe neighborhood and a doorman building...

 

[Toby'sFriend]

I have an old Accounting Professor to thank for that advice. I was in his office one day getting help with some homework and I mentioned DH and I were getting a large tax refund and fighting over how to spend it. He asked me why we didn't buy a house and a light bulb went off in my head.

Our first mortgage was an FHA loan and a tiny tiny house. Our mortgage payments were actually less than our rent had been, but the house was smaller - less than 1200 sq feet if you can believe it. We bought it for around $65k and sold it 3 years later for $97k.

About the time that we bought our house I had a friend who asked why I would want to buy an old small badly heated no a/c house when for about the same money she had a larger apartment with access to a Health Club and a Swimming Pool. Three years later, we were moving up and she and her husband were still in their apartment. I know that it is completely a matter of lifestyle preference, but I think that is what people mean when they say rent is "throwing your money away."

 

[sweet angel]

My ex-h and I had a 2-family we bought with his parents. That was a nightmare. When I divorced and was a single mom, I rented for 5 years. It killed me to shell out money month after month and get nothing in return. Sure, you don't have to worry about maintenance or repairs...unless your water heater breaks over Thanksgiving and your landlord is away, or something similar.

Anyhow, to quote:

Our first mortgage was an FHA loan and a tiny tiny house. Our mortgage payments were actually less than our rent had been, but the house was smaller - less than 1200 sq feet if you can believe it. We bought it for around $65k and sold it 3 years later for $97k.

This is pretty much the situation I'm in now. I bought a house with an FHA loan for $90K in 2000 (936 sq. ft). Refinanced it twice (to get out of the FHA). My mortgage payment (including taxes and insurance) is less than my rent was, and if I sold it today, I could probably get about $250k.

 

[DWhittles]

What is an FHA?

 

[sweet angel]

This link will show you what you need to know.
FHA today
Basically, a federal program that allows those with low down payments (and maybe less than pristine credit -- not sure on that) to buy a home. They kind of make you jump through hoops, but it's sooo worth it in the end.

 

[jel0511]

We've owned since we got married 10 years ago (first a condo, now a house). Why do some people see renting as throwing your money away? Because when you own, a portion of your mortgage is principal (ie paying yourself) and interest (which is tax deductable). You also have your real estate taxes deductible. So, the principal part can be seen as a forced savings, (increasing your equity in the place) and the interest component can be reduced by a lot (depending on your tax bracket) by becoming a deduction on your taxes. So, the "real" payment is less than what you'd pay to rent, and you own. You also get to see the appreciation of owning an asset, which you do not see in a rental. An example, using completely made up numbers:

$2000 mortgage payment

$500 Principal
$1500 interest

Out of the $1500, you receive a reduction of your tax liablility of approx $500 (assuming 33% tax bracket). So, in reality you're only paying $1000 out of pocket (as you get the tax break and the $500 principal is a relocation of assets) for that house each month. I'm not calculating real estate taxes, as that can very GREATLY depending on where you live and house value.

Now, renting can make sense when you're in a short term situation and the housing market is slow, or don't intend on settling where you are. If you have credit problems, or no down payment the options are small, but they do exist to get you home ownership. If your credit score is more than 650, you can usually qualify for the 0% deals, though the loan amount is usually limited to FNMA standards (which I believe is in low $300k now).

Personally, I'd never rent again, and we decided to buy because it made financial sense to own instead of renting, even in NYC.

 

[DWhittles]

This link will show you what you need to know.
FHA today
Basically, a federal program that allows those with low down payments (and maybe less than pristine credit -- not sure on that) to buy a home. They kind of make you jump through hoops, but it's sooo worth it in the end.

Hmmmmmmmmmmmm...interesting. I'm going to check it out. We would like to own but I'm really hesitant because I've married the MOST unhandy man on the planet. If something needs to be fixed, it's up to me and that portion of home ownership does NOT appeal to me.
I would however love to settle down and maybe paint the walls of a room something other than white and hang curtains...

 

[Toby'sFriend]

FHA stands for the Federal Housing Authority.

They are an agency that guarantees loans for many home buyers, many of them first time home buyers. Because there is an Federal Agency guaranteeing the loan against default, lenders are willing to make the mortgage with a much smaller down payment, and easier income and debt ratios that most conventional mortgages require.

People usually try to drop their FHA mortgage for more traditional financing when they can because FHA rates are usually a little higher and you are required to purchase FHA mortgage insurance.

 

[goofyforlife]

Where I used to live in Williamsport, PA...renting would have been better...(the housing values are dropping like flies)

Now when we moved down to Maryland...we rented for two years...until we could get a better idea of where to live.... But the housing market is so crazy here that the townhouse we bought last year would now be out of our price range if we were shopping today.....

We had to buy...especially after owing an additional $7,000 in taxes (and that's after the $8,000 or so they had already taken out of our checks.

This year...They owed us money...

That and we were sick of waiting on landlords to fix stuff or paint or put up blinds...I could go on.... I had to call one landlord four times to fix our MB toilet. After that it was still leaking and we fixed it ourselves....

 

[Tasha+Scott]

We own a home now but rented for the first year and a half we were married. If we had it to do over again we would still be renting. Don't get me wrong, I want to own a home someday but I don't know where. Right now we live beside half of dh's family and they drive us crazy and we really wish we could move! We miss that freedom to pick up and move when the lease is up. Can't do that so easily when you own a home!

 

[EsmeraldaX]

We rent because we are in MA and we make less than 100K a year.
We rent because we don't know where we want to live or even if we will live with each other in 10 years.
We rent because we are renting an enormous 3br house for far less than the mortgage would be on a 1br shack in this area.

I personally only know a handful of people under 30 IRL who own their own homes. The few that do live in literally 1 bedroom teeny tiny houses and were only able to do so because they had parents or other people help them out.

 

[kimisabella]

We own - we bought our first house when we were engaged 7 years ago. We figured that we had some money, and felt that it would be a good investment. We bought the house before the real estate went CRAZY on LI -we sold the house 3 years ago and made alot of money on our investment, and enough to buy the house we are in now. The rent to live on LI is ridiculous, you couldn't get a small 1 bedroom apt for less than $1000/month plus you would have to pay utilities on that. I feel very sorry for the young couples here trying to start out, there is no way they can afford houses here, that's why alot of people are moving off the island.

 

[LoraJ]

I rented for many years but finally bought a condo last year. It's such a nice feeling to know that the place is mine (and Wells Fargo's). But they can't tell me that I can't paint the walls, or pick whatever appliances I want.

And now that I pay property taxes, I have become more involved in local politics.

My last apartment was a 2BR and $1875 a month. My condo is 2BR's and my mortgage including taxes is $1400.

 

[teacherforhi]

I rent. I found a nice house across the street from my school where my landlord doesn't care what I do as long as the house is still standing and I pay the rent on time. Now that I'll be moving to Tucson in a year, I'm glad I am. I won't have to worry about getting rid of a house then.

 

[EsmeraldaX]

I rent. I found a nice house across the street from my school where my landlord doesn't care what I do as long as the house is still standing and I pay the rent on time. Now that I'll be moving to Tucson in a year, I'm glad I am. I won't have to worry about getting rid of a house then.

See, I think this makes all the difference in the world.

We rent.

We put nails the walls. We paint the walls. We put down our own carpet. We have two bouncy Jack Russell Terriers and a fish tank. We have a garden. We have our own stuff on the lawn. We have our own stuff in the yard. We have our own large storage room in the basement. We have our own large section of a large garage.

Our LL doesn't care either, as long as we pay the rent on time and the house still stands when we go. We don't even have a lease.

 

[reedycreek]

i rent cause the housing market on long island (NY) is insane. $400K buys you a 2 BR cape with no property. i found a very nice luxury apartment, and for now, its all i would do cause a) i dont want to spend $3K a month of a mortgage for something just ok b) everything is taken care of for me in my complex now c) i dont feel like dealing with the addional costs and hastles of homeownership.

 

[Laurajean1014]

I've never rented. My family does not believe in it.

We bought years ago and developed credit and equity in the home. Which led us to our current home, which in my opinion is perfect.

I could never afford this home if I did not save up for the down payment and monthly payments towards principal. 10 more years and my home is mine. Just one year prior to my son entering college.

So, I will be "pretend" making mortgage payments during DS's last year of high school, so I can afford college, or take out an equity loan or use the 529 I have for him.

Saving is great.

The only way I would not buy is: if my rent was about 15% of my monthly expense and I was able to invest 50% of my income into an investment that would yield 9% or better.

 

[DawnCt1]

It was recently discussed on one of the "money" cable shows that sometimes it is indeed better to rent, particularly if you own a vacation home in a highly priced "bubble area". If for example you invested $100,000 in a property that has blossumed over time to close to a million, you would be better off selling, investing and then renting back that property. I have the book "So you want to live in Hawaii", and frankly it seems that in a highly inflated real estate market, it is cheaper to rent and without the hassles of home ownership.

 

[snoopy]

I'd rent if I didn't want to invest any money or time into my home. Fortunately, I've always been interested in doing both (well, not so much the money part, but I've always figured its part of life!. )