Am I just better off renting for the next 10 to 15 years.?

Question

I make 45K/year. Divorced. Have my kids Friday through Monday morning. 32

My current rent is 725 and hasn't changed for 4 years
2 bedroom apartment.
I live in the suburbs north of Philly

There are NO homes in the area (including townhomes) for less than 200K. I I can't justify a mortgage over 1000 if I am only making 4000 before taxes. I have two kids 7 and 8 years away from college

I think I would be better off paying my 700-900/month rent for 10-15 years than paying double that for a house that in a 30 year mortgage.

In 10 years I won't need a two bedroom anymore - just a one bedroom.

People at work tell me that I should buy a home, but I don't think it makes sense.

Paying 300K with interest on a home that will be worth 300K in 30 years. I could put the extra that I would end up paying in a mortgage into a 401K and end up with well more than 500K in 30 years.

Plus when you figure in the taxes, maintenance costs, insurance.

I think alot of people get to worked up on how much more that house they bought is worth. It is not something liquid that you can spend. If you sell your house, you are going to have to live somewhere. If your house is worth double, so are the ones that you are now trying to buy.

It is like my parent. They bought there house 170K 30 years ago. it is worth about 350K, now. They are looking to sell and go into a new home in a neighboring state. they new home runs about 430. They really having made that much more because they are still buying a replacement for the same or more.

Answer 1

You make some VERY valid points for renting. These work if you are single.

However, considering the fact that you have kids, you would be better off buying a home.

Being a homeowner gives you tremendous power with a financial institution and you get to write off the interest of the loan, which will cover the maintenance and insurance.

Answer 2

In your situation, I agree, why pay so much. My husband and I bought our house back before the market skyrocketed. I pay with mortgage, taxes and insurance $620.00 a month. I have two kids. We make more than 45K between the two of us and we are trying to figure out how these young people can afford these costs. Unless the market drastically comes down, you are better off investing in your future as a 401K. As for trying to pay a high mortgage plus insurance and taxes, you will live for the house. You would have no life at all. Or live on credit cards which I wonder if some do. Good luck and I think your right at this time in your life.

See owning your own home doesn't just end at the mortgage. You have electric bills, cable bills, car payments, car insurance, food, telephone, medical, gas, oil for furnace, water and sewer bills, excise tax, car registrations and all the every day bills that you don't expect.

Answer 3

There are a lot of factors you left out. But all things being equal, if you're gonna be somewhere more than 3 years the math usually leans towards buying rather than renting (with exceptions of course).
First, your rent will not stay the same for 10 years. Second, the home may go up in value more than you stated. Third, the mortgage interest is deductible on your taxes which can be a sizable amount.
Just my opinion having been there, look for an affordable house (your 25% of gross pay guideline is exactly what's recommended) and don't put a large amount down (because interest rates are still historically low and you can always pay extra). I think you will be very happy you did even 5 years down the road.