Rent or Buy a house?

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#1

Hello there! I hope you’re having a good weekend.
I have a question, I hope you can help me.

I’m living in a rented apartment and I have to move out the next month, do you recommend to buy a house and stop paying rent to other or do you recommend to buy a house, rent to another person and keep paying rent where I live?

There’s now a lot of benefits for first buyers, 0 down and low interest.

What would you do in a situation like this?

I have my own company by the way.

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#2

Hey Andrea! Do you currently have any other debt? How much cash do you have for a down payment on a house? What would your rent be if you kept renting? What are the prices of houses in your area?

#3

I’m an immigrant and arrived 5 years ago to this country, thank God I have now my own business.

I don’t have any debt.

  • My current monthly rent $1,600 (apartment in Casselberry, FL)
  • I have $10k cash for down payment.
  • Houses in this area are about $250k-$300k (new constructions)

Houses in the area where I’m planning to move are about $1,600-$1800 monthly rent.

#4

You’re going to want to save up 20% down before buying

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#5

Hi @Andreapart!

Like @hokie2012 mentioned, I wouldn’t want to buy a place until you have 20% down. Less than 20% could mean PMI as an expense, and exposes you to risk of losing a lot if something unexpected happens (like home prices drop and you need to move).

I would generally buy if the following are all true:

  • You’re out of debt
  • You plan to live there for at least 5 years
  • You have a 20%+ down payment
  • You want to be a homeowner

If those are true, you can take a look at this calculator to see on a pure financial level which is likely to be better. (You can never be 100% sure as it requires future knowledge of the housing and stock markets)

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#6

Thank you so much Jeremy, I will definitely wait because 20% means about $60,000 and I can definitely I do prefer do business and invest that money.

Thank you again :+1:

#7

And remember, when you do decide to buy, they’re are other costs generally associated with the home purchase (closing costs, including appraisal, credit check, title search, taxes, atty fees, and realtor fees) so you’ll need to actually save more than that 20%. Many of these fees can be negotiated, but still- expect other costs with the final sale.

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