Most people when they start out, they rent an apartment and eventually buy a house. I always thought renting was a waste of money. What are your thoughts on it? I wanted to buy a house as soon as I graduate college and if I were to move, I could always rent the house out. If I could get a $80,000 loan, I would be able to pay for the rest.
Welcome to the board. Renting vs buying all depends on your circumstances. Some people have no choice but to rent. If your circumstance affords you the chance to own a home, then by all means go for it.
Weigh the pros and cons of renting vs buying and then go from there.
Ultimately I view paying a mortgage as simply moving money from one side of the asset sheet to the other.
Yeah, house prices can go down, so it's not a perfect way of looking at it but it's close.
To give a personal example, I didn't buy a house until I turned 40; however, for something like 18 of those years I paid roughly 1K/month in rent on average (and I suspect that's conservative actually especially ignoring inflation). Even that pencils out to 216K... which even if it had stayed flat, would've tacked an extra 48% on my net worth in today's dollars. Granted I moved, a LOT, so realistically only 10 years of that should count, but I know what I was paying in Cali rent (1200/month), had I been smart I should've bought a whatever I could afford when I moved here, which is still 120K or 32%.
If you can be somewhere for call it 5ish years and you can get a mortgage, I'd do it personally. Breakpoint might even be shorter than that really, realtor and lender fees aren't cheap but it's probably even around 3 years if you have a 300k mortgage I suspect though that's just back of hand math.
There's more than a few studies floating around these days looking at economic inequality in the US, and one of the primary drivers of wealth over time is home ownership. Renting just makes others wealthy I suppose when I look at it from that vantage point.
It's different for each person. Some people are perfectly content renting, while others are not. I view renting as temporary, just a place to stay for the time being, until something better comes along. I view owning a home as the opposite - it's a commitment for an extended period of time. And of course, renting = paying someone else and the money is gone, and buying = paying yourself in the form of equity. Some people may want to buy but can't afford it, so they rent. Some may not want to do maintenance, so they rent.
I've rented on my own for about 12 years, getting ready to buy a house next month. It'll cost me more per month, but it's almost twice the size of my apartment and I can modify it as I wish (in compliance with town code), and most important to me, I won't be attached to any one - no more hearing people running through their apartments, or slamming doors. Now, though, I'll get whatever fights and yelling occur outside.
Owning is a learning tool too. I'm not much of a maintenance person, but if something goes wrong, I'd be inclined to learn how to fix it - or watch how someone fixes it so I know for next time, rather than always relying on someone else to fix things. Renting can provide this too, but most people just call maintenance, and with owning, that's not an option.
Other than wasting money on rent, if you can afford the payments and upkeep, the government (IRS and State) reward you well with a nice tax break for interest and taxes. Assuming the value of the property goes up over your time there its a nice return on your investment (you have to live somewhere) but at the end of the year I take $16k off my gross income for interest and taxes. Using a 30% (IRS+State) basis, that's a net $400 per month the government is paying me to live there ($16k x .30 = 4800 /12 = 400).
Of course the price of housing in San Franciso vs Myrtle Beach is a big different (4X as much or more) which is a factor and should you go for a condo you need to figure condo fees which can be very high. If the cash flow makes sense and steady income, then there is no question that buying a home makes more sense then renting IMO.
I agree with Pipeguy about cash flow and steady income, definitely make the move to own if you can afford it.
I'm 50 now and remember at 27 buying my first home in San Francisco bay area where I grew up. Didn't realize how expensive it really was because I never had lived anywhere else, but did realize I needed a roommate or two for the first few years to make it comfortable budget wise. After that, I got a few raises and things loosened up. Fast forward to now, I will have this home paid off in 5 years. This mortgage is only $1365 a month now on a $580,000 1190 Sq ft home. I have enough left over that I am now in Escrow on a vacation/retirement home in Tahoe that's 2100 Sq Ft, and I'm still pinching myself and crossing my fingers it alll works out.
Make the investment young, even if it's not comfortable, and when your old like me, you will probably never regret it. Happy house hunting, I hope!
I should add that generally any increase in value that you net after selling your home is tax free. There are a few exceptions to this rule, but for almost everyone its a tax free investment which can be substantial over time.