The Mint Grad

On the move

Moving men“For as long as I can remember, I wanted to be an art teacher, so when the financial aid worked out at a college fairly close to home (but not too close), that decision was pretty easy,” recalls Kelsi L. who graduated and scored her first job last year. “Now, though, with a one-year lease expiring, making the decision to continue renting or buy a house or condo is overwhelming.”

She adds, “With interest rates continuing at record lows, it seems like I’d be foolish not to buy and start having my ‘rent’ money go toward something I own. But that also means tying up more money and making a huge commitment.”

To buy or to rent, that is the question (well, it’s one of them anyway).

When Kelsi refers to “tying up more money,” she means several things: a down payment (cash you invest up front); a monthly mortgage, property tax and insurance payment; and money you need to keep your property maintained (this also may mean the addition of utilities).

In some cases, however, homeownership can actually be cheaper than paying rent. Possible income tax deductions are one reason. And, in the long run (several years), it can be a lot cheaper than renting, as you pay down the money you owe and start to build equity in your home.

In addition to all of the financial considerations, there are also lifestyle factors that should go into your decision.

  • Are you ready to be responsible for all aspects of homeownership? If the furnace breaks, do you want to take care of it, or call a landlord?
  • Do you have a stable job, in a community you like? A stable job is a clear necessity when it comes to getting a bank loan, but homeownership also typically makes more sense if you’re going to be living in a place for a while. If you think you might move in two years, renting might be the better option for you.
  • Would you find home ownership rewarding? Many homeowners enjoy home-related projects, and take pride in putting money toward something that is theirs. Others see it as a burden.

No matter what your decision, be realistic. Good financial choices are all about living within your means – and ideally having some flexibility for fun. Start comparing places in your area to give yourself an idea of what you can afford, and take advantage of free tools that can help you decide whether it’s better to buy vs. rent.

As for Kelsi, she’s decided to continue renting, at least for the time being. “Eventually, I want a home,” she says. “But for now, I like the freedom that renting will give me while I get other aspects of my life more established.”