Tomorrow I am extending my lease until May 2009. With the wedding, there is no way I can save a down payment before then. I'm not even sure I will buy then. I have no idea what neighborhood or house is right for me--a lot can change in five years.
My rent is way below market. It covers exactly (1) lost interest on the house at 4.5%, with a conservative valuation (2) property taxes and (3) condo fees (4) plus $100/month extra. It's a sweet deal for me because my landlord lives abroad, and I do all the repairs and deduct it. Luckily, nothing big has come up yet.
I have a friend closing next week on a starter house. $150K in the burbs, 80/10 financing. I would never live in this house. But I feel a twinge of jealously that she owns a house and I will be renting at 27!
Renting at 27. I KNOW it is the mathematically correct decision. I know my money will earn more than flat real estate around here. I know that I won't have to pay closing and realtors and special assessments and do the property tax appeal. I know that I will be free to move. But renting at 27 still feels like failure somehow.
~Dog
4 comments:
It's normal to feel a bit wistful when reflecting on the opportunity costs of the choices you make. Even though you don't really want to buy right now, it would probably be nice to feel like you had the choice.By getting aggressive about paying off debt and saving, you're on the right track even if it takes you longer than some of your friends.
Not that I normally read men's magazines but GQ is different. In the latest issue with Rachel Bilson, there's an article by Joe Lovell about how renting makes more sense than buying because of the all the maintenance costs and other factors. If you get a chance to read it at the supermarket while in line or something, it's very interesting
I have to admit that I really like renting right now. I have very little responsibility...even my utilities are covered (I just pay cable, internet and electric).
How much do you pay per month for rent?
At least you are recongnizing your envy. Don't let it get you down. Renting can be the smart thing, and you don't ever have to feel guilty if you don't want to, check out Millionaire Mommy Next Door for her take on not buying. For her it made sense. Run some of the numbers and see if it really makes sense for you. Keep in mind the following:
When you buy, you'll then feel the "need" for new furniture, paint, window treatments, etc. which you should plan for before you buy, and keep in your budget.
When you buy, you'll probably end up at least twenty to thirty thousand outside your price range because nothing in your current range "wows" you.
You want the 20% down to get rid of having to pay for PMI (Mortgage Insurance). And don't forget the realtor fees.
So you should focus on saving quite a bit before you buy, and you haven't even paid off your car and CCs yet.
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