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- Author Melissa Jean-Baptiste might own a home, but she still sees value in renting.
- Renting can provide flexibility and an opportunity to save money.
- Take a look at lifestyle and affordability to make sure that homeownership is right for you.
Melissa Jean-Baptiste bought a house before she turned 30, but she admits that it isn't always the dream people expect.
"I do not mince words when I say that homeownership is hands down one of the hardest things I've ever done," Jean-Baptiste writes in her book, "So … This Is Why I'm Broke." "I was unprepared, overwhelmed, and uncertain about everything every step of the way that entire first year."
Jean-Baptiste goes on to say, "Thinking that renting is throwing money away is a money myth that needs to go away. At the end of the day, paying for housing should never be considered a waste and taking your time and renting may be a great way to make sure you are really ready for homeownership. There are so many things to think about before you sign on that dotted line."
She has a point. Interest rates are up, approvals are getting harder, and according to Realtor.com, home listings have dropped by almost 16% in 2023 — which means even finding a home you can afford to buy can be tough. Even if you have an easier time finding and buying a home, ask yourself if it is the right move for you right now.
I am not saying that homeownership is a bad thing or not a valid goal. I am saying that many rush into it too fast and are unprepared and that there is an untrue narrative that renting is a waste of time and money.
Here are a few reasons why renting could be the better option for you and your wallet right now:
1. Your lifestyle might change
If you want to live elsewhere, lack job security, or are not ready to stay in the same place for at least three years, renting might be a better option for you right now. For buying a home to make sense, you will need to stay in that home for three to five years to recoup costs, build equity, and hope to make a profit when you sell it.
2. You don't want to worry about — or pay for — home maintenance
Renting frees you from having to worry too much about maintenance. If the dishwasher goes out, you can call someone else to deal with that issue, and someone else will have to pay for it. If you are a homeowner, when maintenance issues come up, you have to go into your own pocket to deal with it.
3. You have other wealth-building goals
Homeownership isn't always a good investment, especially if you can't comfortably afford it. Renting can be an opportunity to save and invest money. For example, if a mortgage would cost you $2,500 and you are able to rent for $1,800, you can put that extra $700 in a high-yield savings account, invest it, or even pay off debt and increase your net worth while renting.
As tempting as it might be to become a homeowner and to take advantage of the benefits of homeownership (tax breaks, building equity), you do not want to rush into homeownership. Buying a home is not an easy feat, especially now, and maintaining it is a continuous commitment for you and your budget. Doing it before you can truly afford it might actually be worse for your financial well-being over the long-term.
Whether you rent until you are financially ready to buy or you just prefer to rent right now (like me), know that you are not wasting your time or money.