I Might Be Moving In The Next Five Years – Should I Buy A House?

You are considering whether or not you should buy a property, but you know that there is a good chance that you will not be living in the area for the long term. Perhaps you see yourself or your partner with a chance for a promotion or a reassignment in the future or you are only living in this city to complete a degree. Or perhaps you are just the type who doesn’t like to stay in one place for too many years and enjoys a change of pace after a while.

Whatever your reasons are, does it make sense to buy a home if you only see yourself living in the location temporarily? On the one hand, it seems a shame to spend three, four or five years paying rent on a property and then have nothing to show for it afterwards. However, buying a home is a major investment that might not be worth it in the short term.

Better Off Renting?

If you are pretty certain that you will be moving within the next five years, it will likely make more sense to rent a home. Usually, the first five years of your mortgage will be the worst years for building equity. Most of the payments you make during this time will go toward your interest. For example, if you pay down five years on a thirty year mortgage, you will have only built five percent of the value of your home in equity. This small gain in equity can easily be eaten up by realtor fees, bank fees and closing costs when you try to sell again.

Also, the value of your home will not go up as dramatically as it might have done a few years ago. Back before 2008 you could buy a home, wait a couple years and then flip it for a lot more. These days, that is no longer a guarantee as home prices are much more stable. In fact, if you take out a mortgage to buy a house and then sell it within the first five years you actually run a risk of losing value over such a short period.

Home Expenses Covered By Rent

Another factor to consider is that when you rent a home, there are a lot of expenses that you will not really have to worry about. This includes utilities, repairs, insurance and much more. When you keep that in mind, monthly rent is often quite comparable to mortgage payments or sometimes even lower depending on the area.

Of course, as soon as you know that you will be staying in an area for more than five years, buying a home starts to become the best investment. To find out more about real estate and buying a property, contact me at aubra@aubrarealtor.com or 1-888-279-1778.