Buying a House vs. Renting an Apartment

If you’ve followed my other blog posts, you know that I have been searching for a home with my boyfriend for some time now. I should say “was searching for a home” because the search has been on pause for the last couple months. Yes, my last home-buying article discussed how I was super excited about an accepted offer and you’d expect that I’d be relishing in homeownership, hanging curtains, putting mason jars everywhere and inviting everyone and their mother to come over and see my new place.

But, no. After forking up $400 for a home inspection, taking pictures and videos of what was our soon-to-be humble abode and arranging invisible furniture in each room, it didn’t work out. It turns out there are some pretty strict standards that townhouse and condo associations have to meet in order for prospective buyers to get financing. The association this townhouse was part of didn’t meet some requirements and we had to walk away with our dreams crushed and our pockets $400 lighter.

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After that, we tried to move on. Unfortunately, time and time again, we ran into similar problems. Maybe this just isn’t the right time, we thought. So, my boyfriend and I decided to take a little break from the home search.

This was hard because we still really wanted to live together. I, for sure, was so ready to move out of my parents’ house, and he definitely was too. Especially after he had already lived on his own for two years before moving back with his parents to save money for our future home. We came to a point where we were considering an apartment. So, we started looking for apartments online and making appointments to go visit some places.

Our first visit was to a very large tudor-style apartment complex that was very, very pet friendly which was super important because I could never leave my dog behind. However, after some thought, we realized we didn’t want to jump on the first apartment, especially when we saw units with cheaper rent on other websites.

Our second visit was to a townhouse for rent. I really liked the idea of renting a townhouse. At least it was more “house-y” than an apartment that was accessed from a long hallway, in a large cold building that smelled like smoke and cats.

homey

The townhouse for rent was surprisingly really nice. Fresh paint, brand new carpets, two decent sized bedrooms, with utilities included in the rent. Before leaving, we grabbed a rental application from the women who showed us around and came very close to filling it out and signing it right then and there. But, we decided to wait and talk it out a little more before locking ourselves in the place for a year. And thank goodness we did.

We looked at where we were and realized we had gone from looking at 1,000-1,400-square-foot single family homes and townhouses that would be all ours, to a 600-square-foot box where we would have to walk outside to get to the laundry area and where there was barely any parking. Plus, homeownership is pretty much the pillar of the “American Dream”. We wouldn’t own any part of this apartment except the stuff we filled it with. Not to mention that we wouldn’t be able to save money like we had been for the house we so desperately wanted because it would all go to rent. While it felt really nice to think about being able to move in together and have a place of our own in just a couple short weeks, something didn’t feel right.

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Have we really sunken this low? Are we just giving up? It was extremely confusing. While my heart wanted so badly to move out of my parents’ house and to start a life with my boyfriend, I couldn’t shake the voice in my head saying 1. We’d be throwing our money out the window, 2. If we’re going to struggle for any amount of time, I’d rather do it in a place that’s all ours and 3. No one is being thrown out of their current homes. More time at home means more money saved. Suck it up, and do what you have to do to get what you really want.

For many people, renting is the only option. But, it’s not for us. And by throwing in the towel and bringing renting into the picture, we were acting like it was. We have an opportunity not everyone has, to stay home and save money. And that’s exactly what we’ve decided to do.

The home search brings so much stress, frustration, disappointment. But, we know eventually it’ll be worth it. If you’re a first-time homebuyer ready to give up on the home search and are struggling with the renting vs. buying dilemma, here are comparisons we made that helped us decide to stick with our original plan of buying.

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With a home you buy: It’s all yours, every inch. I’ve heard many people say you’ll never own your home, the “bank” will always own it. Well, then does the “bank” own my college degree and priceless education? My boyfriend’s car? Your motorcycle or boat? How about the Christmas presents you bought last year and the vacation you went on over the summer? If you look at every loan you have, or have had, like you don’t really own what you’re paying for, then what’s the point. You work hard to pay for it, so yes, you own it. And that means you can do whatever you please with it, to a certain extent of course. You can paint it any color, put in any furniture, add on, take apart, do any renovation, etc.

With an apartment: There are rules to live. In an apartment, you pay your landlord rent and your landlord most likely owns the place you’re living in. Sometimes, you can’t paint or put holes in the walls to hang things. You’ll most likely never be able to change the hideous kitchen cabinets, redo the broken tile in the bathroom or remove the stained carpets. You just have to live with it all. And, if something needs to be repaired, you have to rely on your landlord to get it fixed. This might be easy if your landlord is great, but there are some horror stories out there about awful landlords.

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With a home you buy: You’re building equity. When we first started looking for a house, my boyfriend’s mom used to say, “The money you pay each month towards your mortgage is money right back in your pocket.” I didn’t understand this at first, but what she was referring to was equity. Equity is the difference between the market value of your home and what you owe on it. Why is equity such a big deal? Because that difference defines the amount of the home’s value that you actually own.

For example, say your home is worth $200,000 and you owe $120,000 on it. You have $80,000 in equity on your home, which is basically the amount you’ve already paid on the home’s value.

Through a Home Equity Loan or Line of Credit, you can take out a loan from your accrued equity to fund other things in your future like a renovation, a vacation or your child’s college tuition. This loan can be in a specific amount with a fixed monthly payment or a line of revolving credit with the flexibility to draw from the lump sum as you need the money. As a first-time homebuyer, home equity may seem like muddy waters to navigate, but at least you have the option, unlike with renting.

home-equity

With an apartment: Your money pays for your landlord’s mortgage and probably their weekend plans. Paying rent is just that. You’re paying rent. You never see that money again. Your landlord may charge you a little more than the apartment costs them to own. You pay the mortgage on their home, they build equity, thanks to you, and they probably put away any extra earnings for their personal expenses. If you can afford to pay a mortgage yourself, why would you want to pay someone else’s? This component of renting REALLY stuck out to us and made us uncomfortable, which is why we sided with buying.

With a home you buy: You have a home, not just a place to live. For people who want a steady place to live that’s all theirs and no one else’s, or people who plan on settling down and having their own family, buying a house may make more sense than renting. Of course, only if you’re financially stable and can afford to buy. Although there are many things that can fall through the cracks, purchasing a home makes for a more secure living space that you can look forward to growing old in and making countless memories in. Not to say you can’t do that in an apartment, but I think you know where I am going here. If your goal is homeownership, skip the renting and go straight for it, even if it takes time to save.

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With an apartment: You have a place to live in someone else’s home. If you want to travel the world, would rather spend money on experiences and memories than fancy things, don’t plan on staying in the city or town you currently live in or will potentially change your career path in the not-so-distant future, buying a house probably isn’t the right thing for you. You have a mortgage to pay, which can potentially inhibit you from accomplishing those kinds of goals. Or, if you don’t care about putting your personal touch on a place or building equity, and just want somewhere to cook your meals and lay your head down at night, then an apartment might make sense for you, long- or short-term.

It truly depends on your circumstances and personal goals when making this kind of decision. People have their opinions, which are always based on their own experiences and perspectives. But, if the points I provided here can help you at all in making your decision, I guess my lessons learned will help my neighbors who are currently residing in “struggle city”.  If after reading this you’d like to learn more about the home-buying process, visit our article that discusses how you can get started. Read: First-Time Home Buying: A Guide To The Beginning.

Have you gone through a similar experience with the buying vs. renting debacle? We’d love to hear your story! Comment below or email us at TheMoneyMill@jdcu.com.

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