Is it better to rent or buy a home?
A. I consistently hear from people who are young and wanting a place of their own that renting is simply throwing money down the drain. They could be building equity in a home of their own, but they feel stuck in paying off someone else's mortgage. So is it better to keep renting or should they buy their own?
Don’t buy the line that renting is simply throwing money down the drain. Sometimes it is better to keep renting if you cannot afford to buy a house. There is a lot more freedom with renting versus purchasing a home.
I would say if you are planning on being in a place for less than 4 years, then it is wise to rent. The amount of equity that you can build up in the home in 4 years is usually nullified by the amount of money that you will put into taxes, insurance and fix-ups.
More than looking at how long you will be in a house, you need to ask yourself if you are financially ready for the responsibility of being a homeowner. Are you ready for all of the expenses that your landlord is currently covering for you? And do you have an emergency fund set-up and are you living off of a plan consistently? If not, I would encourage you to keep renting.
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