A Home: Rent or Own? Pros and cons.

As I am days away from closing escrow, this is a topic that hits close to home (literally). This is another subject that used to conjure up conflicting ideas for me just a year or two ago. Obviously, I have switched to the home owner camp because the Pros of owning a home outweighed the Cons at this point in my life.

When you are young, and low on capital, renting is always the best option. Monthly payments are low, responsibility is zero and there is flexibility to come and go at a moment’s notice (barring you are renting month to month and did not sign a lease). Those three factors were important to me for many years. I was told I was throwing my money away. I was reminded that I was at the mercy of the landlord, if they ever decided to raise the rent or sell the property. However, I moved around a lot and preferred to travel the world as opposed to growing roots. I did not have the extra cash to place a down payment for a house, pay for unexpected repairs or afford the monthly mortgage.

Over the last year or two, I saved money in the event I decided to purchase a home after all. I was fortunate enough to find a loan to finance 100% of the Purchase Price. All I had to pay for was the Escrow Fees and whatever we decided to renovate in the house. What finally made us take the step to buy a house was the comparison of renting and owning over a period of 1 to 5 years. The first year shows the favor towards renting due to all of the money paid for mortgage and/or maintenance/repairs. The shocking part was that even after the third year, there is a great upswing towards owning your home. After five years, the difference is huge. Yes, the outlay for a purchased home is great, but that money invested has an even greater return. It was that idea that sold me; a long-term investment which will allow for a roof over my head and making myself rich, as opposed to my landlord. Once we found the house that best suited us, it was the excitement of custom tailoring it to our taste that motivated me. We plan to pull the carpet, fix the pool, put tile down instead of the vinyl in the kitchen. Even if it is just for five years, a potential $50,000 increase in equity is not bad for a few minor renovations