…There’s a lot of pressure to buy a home instead of paying rent….[While] there are some very valid financial arguments for homeownership buying a home isn’t the best choice for everyone [so, in response to all those friends/acquaintances who say,] “Why are you renting a home? You should be buying! Don’t you know you’re just throwing your money away?”…here are 8 retorts for those house-shamers in your life.
The original article has been edited here for length (…) and clarity ([ ])
1. Renting is cheaper
This is not always the case, but is often true, especially when you factor in things like property taxes, association fees, and maintenance. NerdWallet last year reported that the median monthly cost of homeownership was 54% higher than renting nationwide — and higher than 90% in some states.
Many families choose to stretch their budgets when they buy a home, and that’s not always the wisest choice. If you are able to live within your means while renting, but aren’t sure if you could make ends meet if you bought a home, don’t feel pressured into buying.
2. There are multiple ways to build net worth
Owning a home can be a great way to build your overall net worth, but it’s not a requirement. As long as you are saving more than you are spending, you’re increasing your net worth and you can give that a boost through a variety of other means, including investing in stocks, bonds, or collecting rare baseball cards. You have the right to choose your own methods for building your net worth. There is no magic formula. (See also: 10 Ways to Increase Your Net Worth)
3. A mortgage is still debt
Unless you are swimming in cash, you’re likely going to have to borrow money to purchase a home. In fact, most homeowners are dealing with mortgage loans of tens or even hundreds of thousands of dollars that will take decades to pay off.
Taking on a mortgage loan is nothing to take lightly, especially if you already have debt from student loans, credit cards, or automobiles. You have a right to decide what debt load you are comfortable with. Some people choose to live 100% debt-free, and that’s perfectly fine. You should resist any pressure to go beyond the debt load you’re comfortable with.
4. You need to get your financial house in order first
It doesn’t make sense to try and buy a house if your financial situation is a mess. Perhaps you have a low credit score or big loans to pay off. Maybe you’ve been dealing with inconsistent income due to a job loss or struggles with your business. Or maybe you are just learning to get your own personal spending under control in order to save money.
If your finances aren’t in good shape, it may be hard to buy a home in the first place and any home you do buy may just place additional stress on your money situation. If you feel the need to respond to a would-be house shamer, a simple reply of, “We need to get our financial act together first” is a reasonable response.
5. You simply may not want a house
The bottom line is that you may not want to own a home in the same way you have no interest in owning a dog, a fur coat, or a herd of alpacas. People can make all kinds of financial arguments in favor of homeownership, but they are meaningless if you don’t actually want a house. A house comes with work and responsibilities that you may not have interest in. You may not be drawn to the idea of settling into a single place. Homeownership just may not be your thing, and that’s fine! If you don’t want a house, don’t buy one. (See also: 4 Worst Reasons to Buy a House)
6. You have other priorities
You may one day like to own a house, but choose to use your time, energy, and money on other pursuits at this point in time. Perhaps you’d like to finish graduate school or pay off student loans first. Maybe you want to focus on building your business or your career. Perhaps you want to focus on your health after recovering from a long illness. Maybe you’d like to spend a few years with your new spouse before taking on the responsibilities of homeownership. There are a million things you can do to better your life at any given time, and buying a home is just one option.
7. It takes time to save for a down payment
One of the easiest ways to get into financial trouble is to purchase a home with little or no down payment. The less money you put down, the more money you have to borrow, and the larger your monthly mortgage payments will be. Putting less than 20% down on a home might mean you’ll be required to buy private mortgage insurance, and that adds cost to your loan. The sensible way to buy a home is to save as much as you can and put down a healthy down payment, thus keeping your monthly payments low and putting you on the fastest path to building equity and wealth. (See also: 4 Easy Ways to Start Saving for a Down Payment on a Home)
8. You’re not settled on where you want to live
It takes time to get a strong sense of whether you want to settle down in a specific community. Maybe you aren’t quite settled in your career. Maybe you or your spouse are in the military and know you may have to relocate within a year or two. If you buy a home and decide to move within a few years, you could be faced with the pressure and work of selling the home. If you have not had time to build equity in the home, you may not make much profit on the sale and may even lose money. This also comes down to comfort level. If you simply don’t feel right buying a home in a community you don’t plan to settle into, renting is perfectly fine.
Bottom Line: It’s Nobody’s Business But Yours
Look, you’re going to get all kinds of advice on how to best manage your money. A lot of that advice is great. Some of it is not but, ultimately, the decisions you make with your money are yours and yours alone.
The choices you make with your money should be based on your own personal situation and values. The next time someone questions why you haven’t purchased a home, it may simply be best to say, “None of your business.”
Related Articles From the munKNEE Vault:
What if you plan on renting forever? You don’t need to worry about maintaining strong credit and building a high credit score, right? Wrong. There are still several money moves you need to make to ensure a happy financial future.
Should you keep renting, or should you buy a home? It’s an age-old dilemma nearly every American adult wrestles with at some point. No one wants to throw their hard-earned cash away on rent payments they’ll never see again when they could be investing in a home that will grow in value and potentially provide a nice return one day. If that line of thinking sounds familiar, Todd Sinai, a real-estate professor at the Wharton School of the University of Pennsylvania, would like to stop you right there.
The price gap between renting and owning based on dollar amounts ranges from approximately 48% on the high end to 30% on the low end. With the data below, potential homeowners can make more informed choices on where to settle down and which states will stretch their pennies furthest.
A recent Gallup survey on expected future returns of asset prices shows that most Americans still think that owning a home is the best way to generate a high return in the future. Nothing could be further from the truth! It just shows how totally out of touch with reality the average American is.