Popular wisdom says that you should purchase a home. Have you ever been to a party of homeowners and told someone you rent? It’s not uncommon to hear people mumble that you’re “throwing money away” and not “building equity” through mortgage payments. Because you don’t own a home you’re cast aside as some sort of second-class citizen.
Here’s the million-dollar question: should a creative individual buy or rent a home?
I think you’ll be surprised by my answer.
The issue of buy vs. rent is especially difficult because the creative community is a varied bunch. Although it’s unfair to stereotype a group of people as large as ours, I think we can agree that many of us are wandering hearts. We create for many reasons, but it takes a person comfortable with exploring unfamiliar territory to do what many of us do. A home ties us down, and that may work against our goal as artists.
That’s why my advice on a home purchase differs from prevailing wisdom available to the general public. Advice aimed at a general audience isn’t always right for a creative who is self employed, may work for many different companies in a year, and often has more than one job at a time.
Here’s where I come down on the “Great Home Debate”: I lean toward renting a home until you fully understand the problems unique to your career choice.
But, there are some positives to home ownership that we should first explore:
- Homes build equity. It’s true that in every mortgage payment a portion purchases your home from the bank. When you sell the property, you can capture this money and use it for other goals.
- You gain tax advantages. If a homeowner itemizes their deductions for tax purposes—and most do—both mortgage interest and property taxes are deductible.
- In this low interest rate climate, you can leverage the bank to purchase real estate. By taking out a mortgage to purchase property, you can put down less money toward a house and invest your cash instead into investments paying a higher interest rate. You’ll end up gaining wealth in both the value of the property and investments that are appreciating more quickly than the house.
Those are some nice-sounding benefits, aren’t they? You may have heard of all of these attractive reasons to purchase a house.
Now, here are the less understood reasons you may want to think twice before buying:
- Renters don’t have to fix most home problems. Repairing the dishwasher and air conditioner fall to the landlord. When the cost of upkeep on a home is added to the cost of a house, renting starts to look more attractive. Throw in the fact that a renter doesn’t have to pay property taxes or homeowners insurance, and the scales begin to weigh more heavily still toward renting.
- Creative individuals are often on-the-go. What happens if you are asked to tour Europe? Who is going to take care of your home? Renters can turn back in the keys while a homeowner tries to sell property or finds someone to care for it while she’s gone.
- There are better forced savings plans than a mortgage. Your house appreciates whether you own it or the bank. When you pay down a mortgage, your only reward is that you aren’t paying the interest anymore to the bank. Because rates are low and are tax deductible, loan repayments are low interest rate investments.
My point isn’t to avoid purchasing a house. Maybe a new house matches your lifestyle and needs. Financially it may not be a wonderful use of money, but that doesn’t make it a bad goal. Owning a home can be a rewarding experience if you enter into it with your eyes wide open.
When you decide to purchase a home, remember these tips:
- If your art forces you to travel often, purchase a home below your means. Lower cost homes sell more quickly in poor economic conditions, allowing you to move on without worrying about a house many miles away.
- Families hoping to purchase a home flood the market with buyers in the summer months. As they settle into the school year, prices drop in the late fall through January and February in most communities. To find a good deal, avoid shopping when houses are selling quickly because of increased competition.
- Pay for an inspection before you buy! People trying to save a few dollars will often skip hiring a professional inspector who gives you a written statement of a home’s potential problems, figuring they can probably see everything that’s wrong themselves. Always hire an inspector. They’ll find problems you wouldn’t have dreamt of.
Purchasing a home is one of the most expensive transactions most people ever encounter. By thinking about your art first, when you decide to buy, it’ll be a home that matches your goals and won’t hurt your aspirations.