Are you buying or renting? What are the perks of being a homeowner? Think through and focus on both financial and non-financial reasons.
In this episode of the Finance For Physicians Podcast, Daniel Wrenne talks about the rules of thumb when deciding whether to buy or rent a home.
- Why buy? Live in it 3-5 years to break even and recoup upfront transaction costs
- Why rent? The best option if you plan to live there only a couple of months or years
- Numbers: Mortgage closing, realtor commissions, improvement costs, and ROI
- Taxes: Deduct ownership expenses; can’t deduct property/mortgage insurance
- Insurance: Renter’s insurance is less expensive than homeowner’s insurance
- Homeowners’ Association (HOA) Fees: Added costs for homeownership
- Uncertainty and Overestimation: Bias of living in a home longer than expected
- Lifestyle Creep: Living beyond your means and not analyzing home prices
- Headache Factor: Rent-not your problem; buy-home ownership increases issues
- The joy of Ownership: Cultural and cool factors to owning your own home
- Renting: Gets old not being able to do what you want with your place
- Rent vs. Buy Examples:
- 2362 Heather Way, Lexington, KY
- 8704 Grand Ferry Dr., Austin, TX