Have you ever heard the phrase, “Renting is throwing your money away?” Well, that doesn’t tell the whole story.
Let’s dive into the ultimate showdown of pros and cons. Renting offers flexibility without the long-term commitment, while owning brings a sense of stability and the pride of calling a place your own. Each side has its perks and pitfalls, and it’s time to uncover which option suits your lifestyle. Get ready to explore the exciting world of housing choices!
Don’t Rush Into Buying
Buying a condo is such a life-changing experience. It’s something you should take your time with. There are many factors to consider, such as how much of a down payment you have, the current state of the housing market, and the actual monthly cost of owning a condo, including homeowner association (HOA) fees.
Save for a Down Payment
If you don’t have the money for a decent down payment on a condo, taking money from your 401k towards the down payment of a condo isn’t a wise move. There could be a financial penalty for withdrawing funds from a retirement account, not to mention that money is for your future. The best option is to save until you have enough to put down on a house.
Build up an Emergency Fund First
Life is unpredictable, and you never know when an emergency or urgent situation may occur that requires you to have quick access to cash, such as broken pipes or a major appliance that needs replacing. If you use up all your available cash as a down payment on a condo, what money will you have when (not if) an unexpected event happens?
Check Interest Rates
Before buying a condo, be sure you’re looking at the current interest rates on home mortgages. If the rates are low and your finances are in order, the time may be suitable to step into home ownership. If home mortgage rates are higher, that may increase your monthly payments. Don’t pay more interest on a loan you don’t have to pay.
Investing in a condo may sound like a good idea in your current life situation, but life changes. You may be living single at the time of purchase, but what if you get married and have kids down the road? Will you want to raise a family in a condo space, or would you like to move into a bigger, family-friendly home? It’s something to consider before taking that leap into home ownership.
High HOA Fees
Paying monthly homeowner association fees is one of the responsibilities of owning a condo. No one enjoys paying them, and depending on where you live, they can be several hundred dollars a month on top of what you’re paying for a mortgage. That’s why it’s essential to know beforehand what the HOA fees are if you can afford them and are willing to pay them.
Don’t Buy if You Don’t Have To
Only buy a condo if there’s a pressing reason for purchasing one. Many people will tell you that you’re wasting your money on rent and that buying is the way to go. You must pay to live somewhere, so rent is a good use of money. Please don’t buy a condo because other people say so; buy it because it’s the right decision for you.
Ownership Builds Wealth
Owning a condo is the start of building wealth. If you make your mortgage payments, keep your property free of liens, and stay on the right side of the homeowners association, it will belong to you at the end of the mortgage period. That property has a value that can increase over time, but it grows slower than it would with a single-family home.
Buying Can Be Cheaper
Under the right circumstances, such as a low home mortgage interest rate and a sizeable down payment, your mortgage can be lower than your rent. For example, two of my relatives went from paying more than $1200 a month in rent to living in apartment complexes to buying their own homes, with mortgage payments of $400 and $600 monthly. That’s how a mortgage should function.
Potential for a Low Down Payment
The cost of buying a condo is usually lower than the cost of purchasing a single-family home. This potentially means a lower down payment is required to buy a condo. Putting down 20 percent on a house is a reasonably decent amount. For a conventional mortgage for a condo, the down payment can be as low as 3 percent, which can be an affordable option for aspiring buyers.