Rent vs. Mortgage: Which one should I pick?

[Svnla]

So I need to get a new living arrangement soon (end of this year is the latest). Here are my choices:


*****Situation 1:****** Rent for about $550 for 1 bedroom plus utilities (electric and water).

Pros: only 6 months committment, cheaper to pay, no worry about the current housing market, can pick up and move anytime without much problem/penalty.

Cons: can't remodel/change anything inside, no equity, no peace and quiet as a house


*****Situation 2:**** A brand new house (stand alone 1600 sf with 3 beds and 2 baths and 1 year builder warranty) with mortgage/taxes/home insurance about $1000 plus utilities. I will pay 20% down so there will be no PMI. This area is a brand new subdivision with a brand new elementary school to be open soon. Housing prices around these areas are stable and go up a bit (single digit gain) in the last 10 years or so.


Pros: place of my own (first time ever to buy a house), bigger place, equity

Cons: current housing market, have to stay at least 2 to 5 years to cover the initial costs, if I lose my job it won't be fun (1 income only), cost more on utilities

I am in my 25-35 age range, working full time now and the situation is good <government related so no fear of layoff> plus I am single with no kid. I can afford the house without any problems, just not sure it is the "right" choice for me in the long term.

Right now I am 50-50 on both sides. So give me your personal inputs and experience if you would. If I miss any pros/cons on both sides, let me know. TIA.

 

[LegendKiller]

Rent.

 

[Svnla]

Originally posted by: LegendKiller
Rent.

Can you elaborate more? because of current housing market?

 

[Ns1]

don't forget repair & maintenance on your house vs free.

 

[spacejamz]

u gonna stay in Lousiana?

 

[Svnla]

Originally posted by: Ns1
don't forget repair & maintenance on your house vs free.

It is a brand new house so I am good for at least a year.

 

[Svnla]

Originally posted by: spacejamz
u gonna stay in Lousiana?

That's one thing bother me. Shall I stay or shall I move to DFW/Austin (my top 2 choices atm).

 

[spacejamz]

Originally posted by: Ns1
don't forget repair & maintenance on your house vs free.

plus other expenses for furniture, applicances, lawn equipment...the list goes on and on...

not having to put with neighbors w/ common wall is a big plus in my book though...

 

[Capt Caveman]

Based on your location, housing prices will continue to fall. Unless, you're in love with the place, I would rent for six months and reaccess then.

 

[paulxcook]

I would say rent. Owning a house is expensive, especially when stuff starts to break. And if you were to want to move suddenly, or even not suddenly, right now you'll have a tough time selling your house. Isn't there a house you could rent so you didn't have people living so close to you?

 

[Ns1]

Originally posted by: spacejamz

Originally posted by: Ns1
don't forget repair & maintenance on your house vs free.

plus other expenses for furniture, applicances, lawn equipment...the list goes on and on...

not having to put with neighbors w/ common wall is a big plus in my book though...

yup. you're gonna kill yourself with an empty house and want to buy tons of shit for it (probably).

one con of having too much space...

 

[spacejamz]

Originally posted by: Svnla

Originally posted by: spacejamz
u gonna stay in Lousiana?

That's one thing bother me. Shall I stay or shall I move to DFW/Austin (my top 2 choices atm).

where is that new house/apartment located?

 

[Capt Caveman]

Originally posted by: Svnla

Originally posted by: spacejamz
u gonna stay in Lousiana?

That's one thing bother me. Shall I stay or shall I move to DFW/Austin (my top 2 choices atm).

If you're thinking of possibly moving out of the area then definitely rent and take your time to decide.

 

[Gooberlx2]

If I were in a position to buy a house right now I would...but only because my wife and I are secure in our jobs and have no plans to leave the Denver area for years...if ever.

For you, OTOH, it makes better sense to simply rent, especially if you're even remotely considering a job/location change.

 

[Vette73]

Get a cheaper house, not to hard in this market depending on where you are at, and/or ask for a lower price on what you are looking at now.

If you buy a house get a well checked out roommate and let them pay some bills and stuff them in the small room.

 

[E equals MC2]

Here's an idea!

3. Own then rent it out! Profit!

 

[dakels]

It's a pretty big difference in a lot of factors for you. Big thing of course is always money. I guess your job seems reasonably stable, you have money in the bank (I wouldn't be comfortable without at least 10k, preferably much more) and you are not stretching yourself (less the 35% of your income to mortgage). If not, or you are not entirely comfortable with it, I would rent and save up money and think things over. 6 months is nothing and in this current housing market, I wouldn't be surprised if that house or something very similar is available in 6 months.

Other considerations is do you travel or away from home often? Plan to make significant changes to the house? Planning large purchases/expenses like a new car in the near future?

 

[BurnItDwn]

It depends on what you're planning to do in the future.

If you're planning on staying put for 10 years or more, without a doubt, buy.
If you're planning on leaving in less than 5 years, without a doubt, rent.

If you're on the fence, (which is what it sounds like to me because you're considering moving to DFW or Austin), then it's a toss up. I'd maybe consider buying something older and smaller. Something like an 800-1000 sq foot 20+ year old ranch house with a garage and a basement would probably run you a good amount less than new construction, and due to smaller size, utilities would probably cost less.

Of course the market isn't doing so well now, and if you do wind up buying, you'll probably lose some money if you sell any time soon. It's up to you to decide if it's worth it.

 

[dakels]

Originally posted by: E equals MC2
Here's an idea!

3. Own then rent it out! Profit!

That's a different situation all together and an entirely different headache. Proper insurances, zoning, management, indemnifications, etc all depending on location and situations... And not all places make enough rent to pay for the mortgage. It all depends on the market of course. Where I live, many small property owners do not make enough in rent to cover the mortgages and expenses, *several* conditions depending.

 

[Svnla]

Dakels - money is not a problem, I have zero debts and the car already paid for and I won't buy one for another 5 years or so. I don't travel much for this job, probaly two to three times per year.

E =MC2 - If I buy this house, this will be for me, I won't be a landlord.

Marlin - I could get a cheaper house but I don't want to deal with maintenance and other old housing issues. I am not sure I want roomate at this time.

Gooberlx - that's what I worry about, not 100% sure I want to live here at least 2-5 years.

Caveman - that's one of my thinking.

Ns1 - right now, if I buy this house, I will get a refrig and a stove and that's it for at least a year.

Paul - if I rent a house without roomates, the house rent cost would almost the same as the mortagage.

Burn - I did thought about buy an older house but I am not really into home repair/maint. things


Another thing about this area is there will be a brand new elementary school open soon and this area is steady with house prices. Single digit gains, even during the boom years (last 10 years).

 

[AntiFreze]

I've been renting for 4 years of college, and 2 out of college. I'll continue to rent for a long time. I say buy a house when you have kids and know you will be sticking around.

 

[JTsyo]

Everyone says, you can save the money that you spend on rent on the mortgage. But for the houses I'm looking at here in NJ, the property taxes are about as much as rent is. Also something I thought about is if I save for about 5 years, there will be almost no mortgage on the house but buying and then paying it would take about 30 years. Though I doubt I'll be able to wait 5 years before buying a house. Point being saving first can be much better in the long run. Also living in a house means a lot more chores than an apartment, so don't forget time needed.

 

[amdskip]

Buy if you will rent a bedroom out.
Rent if you do not want to rent a room.

I have a 3 bedroom house all to myself. I had a roommate for a while and I will hopefully find a new roommate when I complete the bathroom remodel. It really makes a difference on costs having that extra money coming in.

 

[nanette1985]

There is no such thing as a house without repair/maintenance costs. Part of house owning is that you are continually taking care of it. Things break. Accidents happen. Things wear out.

I vote for rent.

 

[MasonLuke]

Buy the house. Rent the other 2 rooms to friend and co-worker so they help pay for the mortgage. You'll be set.