Is Renting Or Buying A House In Your 20s Better?
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Renting as opposed to buying a house may be more favorable to someone who simply needs a roof over their head. However, many could argue that buying a house in your 20s, is a more solid step towards wealth. Both scenarios highlight varying levels of financial commitment and responsibility. There is no wonder why buying a house as a young adult versus renting remains an ongoing debate.
Whether it be a condominium, apartment, townhouse, or single-family home, receiving keys to a place of your own is gratifying within itself. Renters may boast about their limited to nonexistent responsibility of general maintenance. But homeowners can also flex their bragging rights by stating they are their own landlord.
Yes, once keys are handed over renters and homeowners can come and go as they please. But a renter can change their mind and move in twelve months.
On the other hand, a homeowner would need to consider loan terms and the current market if they’re overcome with buyer’s remorse. It doesn’t matter if renting or buying a house in your 20s scores more brownie points, as long as you don’t take on something you’re not financially and emotionally available to commit to.
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Buying a house in your 20s comes down to knowing when you’re financially ready. This includes the responsibility of a mortgage payment and the excitement that may follow a closing (repairs, renovations, budgeting, etc.). As a renter, you have the luxury of contacting your landlord or property manager to handle repairs as they arise. Have you ever heard one of those cheesy salespeople say – you break it, you buy it? Well, if something breaks for a homeowner, they definitely have to fix it since they clearly bought it. In other words, buying a house in your 20s will grant many proud moments, but the expectations can make some people think twice.
Preparing for housing, in general, does not always have to apply to a current situation. There are people who may buy a house with the vision to start a family someday; whereas, a person with singular goals would suggest a rental is perfect for their budget and responsibilities. You may be someone with one obvious housing goal (not to be homeless), and that’s okay as well. Whatever your ideals are behind choosing to rent or buy, your decision should at least allow you to save money.
Even if you’re not someone who likes to make plans, you will kick yourself if you spend years renting and don’t have a decent amount saved to show for it.
Homeowners have more of a safety net in this arena. That’s because if a situation develops where they need to move or are struggling to pay their mortgage, they can hopefully leverage their options to short sell the house to avoid foreclosure. Or they can rent it for additional income. They can also leverage any equity to catch up on bills (if their local market is in better shape). Renters would most likely feel they dodged a bullet knowing they cannot be foreclosed on. However, if a landlord is dealing with foreclosure proceedings, the tenant will eventually be told to vacate the property by the bank or their landlord. The grass is not always greener on the other side, but with nationwide housing programs being offered to first-time homebuyers, it could be in your best interest to explore all of your options.
There is absolutely nothing wrong with you if paying the first and last month’s rent, and security deposit seems more attractive than a down payment and closing costs. Maybe you’re more comfortable with a lease at the moment because you are rebuilding your credit or your schedule is too hectic to pour into a place you cannot enjoy often. On the flip side, you could feel more drawn to buying because you would rather pay your own mortgage or don’t want to ask permission to paint one wall.
The bottom line is, different strokes for different folks. If you are trying to determine what side of the fence you are on, keep these factors into consideration: timing, finances, and lifestyle. Allowing yourself to get hung up on another person’s outcome (i.e. homeownership) may influence you to jump headfirst into a real estate investment. This could seem unrealistic right now but ideal in the near future.
If you are tossing around the ideas of renewing your lease or suiting up for a mortgage, it’s essential to identify your financial stance in either direction. Many homeowners say the reason they finally decided to buy a house in their 20s was because their rental payments were higher than average mortgage payments.
While considering what route to take, be very clear on how you want to live and how much you want to spend. For those who usually pay a rental amount that includes utilities, a homeowner will most likely be dishing out for each bill individually.
Building up a substantial amount of savings is not a direct implication that you should make a big purchase. Despite the increase in property taxes and rental prices all over the United States, rent control does still exist. There are some landlords who are not overinflating their rental amounts and choose to truly accommodate affordable rates and long-term tenants. Take advantage. Living comfortably and saving money is a win-win.
Some people may want to rent because the process is not typically as complex as purchasing a home. Deciding not to buy a house may be more suitable down the line, which is more common than you may think. In the meantime, reflect on how your career allows you to live, what freedoms renting grant you, why you have not purchased a house yet, and if your lifestyle allows you time to address homeowner concerns. These are only a few ideas that could positively alter your mindset about renting versus buying a house in your 20s as it applies to your life.
Licensed Florida Real Estate Agent
Debrah is a Licensed Real Estate Sales Associate and Certified REO & Short Sale Specialist with a growing team of successful agents. She educates future first-time homebuyers via her co-created e-course and local events. Her 90% referral business has allowed her to close over $13M in sales transactions.
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