Growing up, it seemed like a rite of passage to buy a house and settle down. Today, the housing market and our lifestyles are different.
Savvy renters and buyers start with a budget. Items include insurance (renters vs. homeowners), mortgage payments, upfront costs like first and last month’s rent vs. down payments and associated costs, and potential maintenance costs (pest control, pool service, outdoor care).
There are pros and cons to each and it’s smart to make the right financial decision. Making a complete list of what you can afford, what you want to manage and where you want to be will help you make the right choice. Lifestyle questions should be factored into your decision in addition to your budget.
1. Maintenance: If you are not one who can make regular repairs or simple maintenance, this is something to budget for just in case. Renters can tap into onsite or contracted professional maintenance teams and for many of us, this is a big relief. My parents had a to-do list of home maintenance every weekend.
2. Emergency funds: Arizona’s monsoon season reminds me of the importance of having a household emergence fund if you own your home because there seems to be a bit of damage every year. Major appliances wear out over time and it’s smart to have a household emergency fund for these expenses.
3. Neighborhood: Are you ready to pick an area and commit for a long time? Is there a school or employer that you want to be near? How willing are you to drive to and from work or school? There are opportunity costs to commuting (gas, wear and tear, time). For many education is a priority, so it’s good to investigate what schools are available. If you want to be downtown or close to transit, is there a great neighborhood for you?