When talking about renting a place to live, I often hear people toss around the phrase “throwing money away”. I don’t own a home and I don’t think I will in the near future. Currently I rent an apartment in Reading; the rent is cheap and the apartment is in pretty decent shape. I, in my humble inexperienced opinion, think buying a home a tad overrated. These are my reasons why. Feel free to disagree.
1. Interest – sure you’re not throwing your money away anymore, but how much of your monthly payment is actually going to your home? Interest rates are way down right now, but still, paying say 5.5% apr (current average rate for homes) adds up quick.
2. More Taxes – Homeowner taxes, school taxes: the money you didn’t have to worry about giving away when you were renting because you didn’t have to pay it.
3. Homeowners insurance & life insurance – these are pretty important when you’re trying to protect your assets. Some banks require that you get this while you’re paying them back from your home.
4. Plumbing, heating, water, electric, gas, garbage disposal, cable, and phone. Luckily, right now as a renter, I only have to pay for electric and phone (as I opted out of buying cable). My costs are way down because my landlord doesn’t charge me for all those other things that are necessary when you own a home.
5. Stuff goes wrong. Appliances break (including major ones like the stove, the fridge and the washer/dryer). There are creaks, leaks, holes, and everything else that you are responsible for paying for if something goes wrong or if there’s something you want to fix up.
I’m not trying to discourage anyone from buying a home. I would like to own one some day, but I would just like to say that the costs of all these things added together for a home is probably more than the cost of my rent each year. “Throwing money away” and “throwing money at your interest, taxes, expenses & utilities” aren’t really too far from the same thing in my mind.
Bottom line – save up, wait and little and rent in peace knowing that your money is going to a temporary place to live and that’s okay.