Every one’s situation is different. If you are a renter and wonder whether or not you should purchase a house, I would say it is preferable to purchase a house that suit your needs. The monthly mortgage would be lower than if you were to rent the same house.

The mortgage would be lower than the rent

When I got married, my husband and I lived in a two bedrooms apartment. He has a roommate to cut cost down.  A year after I moved in, the roommate moved out. The rent was about $500 a month. We stayed in that apartment until we have two kids. Because of the noise the kids made, I suggested we moved out since a lot of college students lived in the building. We looked for 3 bedrooms apartments. The cost was over $1,000. We look at 3-bedrom houses. The cost was about $900 a month but I didn’t like how old the houses were.

We finely settled for a two-bedroom duplex with a one car detached garage and a shared yard for $675 a month. We lived there for a year. When we started to look for a house to purchase we decided to find a house that the monthly mortgage would be about the same as the rent we paid in the duplex. We purchased a fixer upper that didn’t need any major repair. The house was near a school in a good neighborhood and not far from a bus stop. The principal and interest cost $575 a month. The monthly mortgage including PMI, insurance, principal, interest, and property tax is about $919 a month. It is a 1,000 sq. ft. 3-bedroom house with one car attached garage on 10,000 sq. ft. yard. For us purchasing a house was better and cheaper than renting it.

If you and your spouse have a job and you know you would stay in that job for some years or you don’t have any immediate plan to move out of the city you live in, it makes sense to purchase a house than to rent it if you can afford it.

If you and your spouse have a job and you have children, it makes sense to purchase a house than to rent if you can afford it. The real issue is not whether to purchase a house or to rent. It is the type of house you decide to purchase that would prove whether or not you should rent or own a house. If the house is brand new and have all the unnecessary gadgets, it would cost more than if you were renting a simple house. Therefore, weight your options right first.

Renting is more convenient that owning a house

If you rent, the landlord is responsible to fix anything that goes wrong in the place. However, if you are a homeowner, unless you are a DIYer, your bank account does the fixing. Therefore, you would need to budget and save every month 1/12th of 1% of the house cost to fix problems that would arise in the house.

Landlord rent their house to make profit. Therefore, they would charge you a rent that is higher enough for them to cover their mortgage, administrative expenses, repairs, and profit. If they didn’t make profit on their investments, there would not be rentals.

The mortgage payment increase equity in the house

When you own a house, each time you make a mortgage payment, you pay a part of the principal. That increase the equity in the house. On the contrary, you don’t build equity in a rented apartment or house. The landlord makes a small down payment to purchase the place and you the tenant pay for his mortgage and build him equity and cash flows every month.

The house increases in value overtime

A house is an asset. It costs money to maintain it. But it does increase in value overtime. When you rent, the equity belongs to your landlords. When you own the house, the equity is yours.

Real estate can be an investment if you purchase one to rent to tenants while you live in a modest house yourself. You can not build wealth if you don’t add income making assets and value increasing assets to your wealth portfolio.