A few years ago, I was nearing the end of my apartment lease. I was a 29-year old single guy who was tired of apartment hopping, so I started to contemplate buying vs. renting.
For the previous decade, I had avoided the idea of homeownership for the following reasons:
- I wanted to stay free and not “committed” to a geographic area.
- I wanted to wait until after I was married to buy so I could “settle down.”
- I didn’t want to mow grass on the weekends.
- If something broke, I didn’t have to take care of it—and I liked that.
As I approached 30, though, I started to get the house itch. The thought of going to look at homes on the weekends excited me, and the homeownership bug had infected me big time.
But before I took the plunge, there were 5 questions I asked myself to ensure I was making a wise decision versus just getting caught up in living the American Dream:
1. Am I willing to commit to this city for at least 3 years?
This was probably my biggest hurdle. For years, the answer on buying versus renting was simple because I was afraid to be tied down to anything (don’t get me started on two-year cell phone contracts). The idea of buying a home was the ultimate in “putting down roots.” I preferred to be non-committal to geography, work, community—even which church I attended. I always wanted to be untethered in case God called me to live abroad. I kept a “the grass is always greener on the other side” mentality. My world was changed the day I heard the quote, “The grass is greener where you water it.”
Personally, I was tired of being non-committal in every area of my life, and I was ready to invest in the city I was in. So for the first time, I was ready to put down some real roots.
2. Am I buying a “home” or an investment property?
I never felt I was going to buy the home my family would one day live in. So instead of buying the perfect home for me, I decided I would only look for homes that would be easy to sell or rent out someday—an investment property. Instead of telling my realtor what I wanted in a home, I told her to show me homes that the most common buyer/renter would prefer. That way if things changed in the short-term, I’d have a better chance of getting out of the home.
3. Am I prepared financially?
This is where it was important to control my emotions and look at the numbers. Thankfully, there were many great websites that let me easily compare the numbers of buying versus renting. (For example, this buy-vs-rent calculator.)
Note: Before you spend too much time crunching all the numbers, there are two simple questions that can put the brakes on home ownership:
Do you have at least a 20% down payment ready?
We’re past the pre-2008 days of “If you can sign your name you qualify.” If you don’t have 20% in cash ready, you most likely will not be able to qualify for a mortgage.
Do you have a good credit score?
One way to drive up homeownership costs is to get a mortgage with a high interest rate. Bad credit score = bad interest rate. It truly is throwing money away.
4. Am I ready to commit more time and money for upkeep, renovations, décor and furniture?
This question is important. When considering buying versus renting, don’t underestimate the cost of weekend trips to IKEA, Home Depot and Bed, Bath and Beyond.
When you get a new house, you’ll want to fill it up. And did you know houses don’t come with refrigerators like most apartments do? Plus, you’ll realize all the little stuff you didn’t need when you lived in an apartment–-water hose, extension cords, and lawn and garden equipment. (Not planning on doing the lawn and garden? Then don’t forget to include the annual cost of a lawn guy.)
Remember that 20% down payment you worked so hard to save? Make sure you have a healthy décor/furnishing fund and an ongoing home maintenance/emergency fund ready in addition to that down payment.
When it comes to filling up a new house, this should be our mantra: “I will not buy a house and then fill it with stuff that I will pay for with a credit card.” If that is your plan, you’re not ready to buy.
5. Would buying a home be consistent with my long-term goals?
This was the final and most important question I needed to answer before I pulled the trigger on buying a home. I chose to purchase a home because I passed the 4 questions above and purchasing a home was consistent with my long-term goals:
Healthier community: Committing to a house forced me to commit to a church and build a real community of friends.
Make wise investments that lead to financial freedom: After calculating the costs, the question of buying versus renting was answered: It made the most sense for me to buy instead of continuing to rent, based on my situation.
As a single person, have you bought or considered buying a home? If so, what questions have you had to wrestle with?
Photo credit: photodean