Apart from the purely mathematical examples you'll find all over the web discussing the dollars and cents reasons to rent or buy in a given market, or at given rates, there is also a purely personality based discussion that every person needs to consider. People need to really sit down and examine their habits to determine if Renting or Buying is a better option for them once the math has been done.
The supporters of renting often show that in many markets it is cheaper to rent than it is to buy. When you add up the costs associated to home ownership, like one time fees associated to buying and selling your home, like moving costs, real estate commissions and lawyer fees, plus the recurring costs such as property taxes, home insurance, and maintenance, it is easy to see how renting MAY allow you to come out ahead monthly. But the discussion can't simply end there. It doesn't matter if you save a few dollars, or a few hundred dollars every month if you spend it in areas that you aren't budgeting for. This is where discipline and self control come into the equation. If you were to find a way to save some money every month, what are you most likely to do with it?
If you're the type of person who will take that money and save it, ideally to supplement your retirement, but at a minimum towards a short or medium term goal that is important to you, then saving that money on renting is an option for you. However, if you don't have the discipline to save that money, then perhaps you should consider buying in order to force yourself to save. At the end of the day, if your rent vs buy calculations come out near equal, having to pay that mortgage every month may be the motivation you need to start building your retirement nest egg. This is where we all need to take a close look at our past, and our future to determine what option is best for each of us. You might also consider what I wrote HERE about setting goals to give yourself the incentive to avoid making financial mistakes in your everyday life.
The question of whether you should rent or buy is ultimately a very personal decision, and one that you should discuss openly with your family and friends. Ideally, if you talk to the right people, they may be able to give you an unbiased view on your past spending habits, and help you reflect on this important decision. I've tried to communicate that this is far more complicated than just dollars and cents. In addition to what we discussed regarding how you might choose to use any cost savings, you must also consider the length of time you'll stay in a rental or purchased home. Will you NEED to upgrade your house to accommodate a larger family in a few years, or move cities altogether for a new job? Your long term goals also heavily impact your decision to rent or buy.
What do you think? Rent or Buy? What's your Goal?
