QUESTION: At a recent family get-together, my 24-year-old nephew asked me about buying versus renting. We talked about a few things, but can you discuss in more detail the factors that go into making that decision?
ANSWER: Owning a home brings with it pride, equity and tax advantages - all very important considerations. Still, there are good reasons to rent instead of buy.
When you rent, you have little to worry about in terms of maintenance. The dishwasher suddenly doesn’t wash dishes? Just call the landlord. When you rent, the lawn seems to cut itself and the weeds magically disappear.
Contrast that to a typical homeowner’s ongoing war with dollar weed and the need to make repairs - sometimes to such big-ticket items as the roof and air conditioner.
There are significant closing costs in buying a home, so it’s more economical to rent if you don’t plan on sticking around for more than five years. Consider that mortgages are front-loaded in favor of the bank, and you spend most of the first 10 years paying upfront interest and making little headway in paying down the loan.
If buying a home will deplete your savings account, better to hold off until you have the extra cash to weather the costs of ownership. While a beautiful home is a wonderful thing, being “house poor“ and not able to go out on Friday night can be a drag.
Think about the bricks and sticks - and also the kind of lifestyle you want - when deciding whether renting or buying is right for you.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program. Send him questions online at http://sunsent.nl/mR20t7 or follow him on Twitter GarySingerLaw.
The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction