The calculations from the article are from Seattle, and basing the numbers off renting vs. buying very similar 3-bed, 2-bath houses in similar neighborhoods:
Let’s look at how the monthly costs break down (approximately) for our hypothetical potential first-time homebuyer:
Renting Buying Rent/Mortgage: $1,495 $2,093 Insurance: $20 $163 Property Tax: - $407 Tax Savings*: - ($327) Maintenance: - $354 Total: $1,515 $2,690
Right off the bat, you see that simply trading straight across from renting to owning results in a 78% more expensive monthly bill. That’s not exactly chump change.
There are a couple differences to our situation in these numbers. First, a 3-bed, 2 bath house in Seattle costs $424,950. To get a similar starter home here would be closer to one-quarter that amount, so our numbers are smaller, just to clear that up. Second, this example has a house that will result in a significantly higher mortgage payment than the rent payment, and this is not something we plan on doing. Yes, a mortgage on a house will be higher than our rent on a one-bedroom apartment, probably, and we need to take into account the other costs listed. Can we handle them in addition to the mortgage payment? The bank will lend us $X amount, but what is a responsible amount to spend on housing? When do we want to have the house paid off? Or do we not plan on staying in the home until it is paid off? How much margin do we want to leave in our budget? What other long-term family and financial goals do we have that we need to plan to leave margin for? So much to think about. At the same time, renting for now has allowed us to save up a down payment we're happy with, and we can't wait to talk to a realtor & check out some of the houses we've only driven by from the outside. Hopefully the house-hunting time, which should begin in about a month, will not be too stressful, and our research will pay off. I can hope, anyway.
I know some of you are going through this process right now, or have recently. What's your perspective? How did you prepare and research when you went to buy a house, and was it worth it? For those of you who haven't yet, is it in the future? This article makes renting make sense, when I never thought it did. Check out the whole thing.
(Another interesting Get Rich Slowly article is also worth checking out, Why Religion is an Important Part of Personal Finance)