If you’ve been out of your dorm room for a while, you may be at that crossroads where you’re trying to decide whether to renew the lease on your post-college apartment or take the leap into homeownership. There are several factors to consider before crossing this item off the adulting checklist.
What’s your motivation?
Sometimes people think they want to buy a house when the reality is that their friends, parents, and/or calendar are just telling them that they “should” be doing so at this point in their life. If you haven’t wholeheartedly decided to buy a house because it’s the best choice for your lifestyle, budget, and long-term goals, you’re probably better off renewing that lease for another year.
What’s your timeline?
Purchasing a house/condo/townhome is a big commitment. The costs associated with buying and selling a property can pile up pretty quickly, and it can take time to find the right place, so it’s important to consider how long you’ll be in one location. If you’ve found a great city or neighborhood, have a steady job, and want to stick around for a while, homeownership may be the best way to profess your love to the town you call home. On the flip side, if you’ve only lived in a town for a short period of time, have no idea in which neighborhood you’d like to put down roots, or have a career that will likely result in relocation, renting may be a better option to afford you some flexibility.
Can you afford it?
Depending on where you end up geographically, the cost of renting versus buying can be dramatic (some housing markets are more affordable for renters, others for buyers, and some are close to even). Whether buying is more expensive than your current rental situation, it’s important to consider some of the additional costs that come with a mortgage. Not only is there the monthly principal and interest to consider, but most lenders require a substantial (think 20%) down payment. There are also taxes and homeowners’ insurance that are generally due with your monthly payment. Property taxes vary by location, but you can expect about 2-3% of your property value each year for most San Antonio area markets. And remember, once you own the house, there’s no landlord to call when a pipe bursts, the air conditioner breaks, or the water heater is busted, so make sure you’re prepared to shell out the cash for home repairs and maintenance.
Does it fit your lifestyle?
Do you mind having a commute? Do you like to be able to walk to shops and restaurants? Is having privacy important to you? Do you have pets? Do you travel often? These are just a few examples of lifestyle factors that may influence your housing decision. If you like a neighborhood that’s “walkable” and near a lot of amenities and your office, homes in that area may or may not be within your budget. If you have three dogs and like privacy, you may be better suited to a home with a yard instead of an apartment. Once you determine which lifestyle factors are the most important to you, you’ll be better equipped to make the rent vs. buy decision.
While these are just a few of the things to consider when making a housing choice, the most important thing to remember is that it’s a decision that should be made thoughtfully, with some planning, and for the right reasons.
