Don’t buy a home when renting would be a better choice.
- The choice of whether to buy or rent a home has major financial implications.
- Dave Ramsey recommends renting a property in certain circumstances.
- If you’re paying off debt, have a job that requires you to move often, or you need more time to plan, renting is your best option.
When you’re deciding where to live, there are two primary choices: Renting a property or purchasing a home of your own. People often have a preference for becoming a homeowner because rent can be seen as a “waste” of money since you aren’t paying down a mortgage and acquiring ownership of the home over time.
But, buying a house is actually not always the best choice. In fact, there are three situations when finance expert Dave Ramsey says you would actually be better off renting than buying. Here’s what they are.
1. When you’re still working on debt payoff
Since Ramsey has a strong anti-debt stance, it’s not a surprise that he suggests becoming debt-free before you buy a home.
“You can hang out there with your cheap renters insurance, letting the landlord pay for all the maintenance, while you knock out that debt,” he advised on the Ramsey Solutions blog.
But while this advice is sound if you have high-interest debt such as credit card debt, it doesn’t always make sense to wait until you’re completely debt-free to buy a property. It can take a long time to pay off some larger loans, and you could miss out on property appreciation and equity building in the interim.
If your debt is affordable, you have a set payoff schedule, and you are otherwise financially prepared to become a homeowner, there’s no reason to put off the process any longer just because you still owe a little money.
2. You have to move for your job
Moving isn’t easy as a homeowner, and there are high costs including real estate agent fees, transfer taxes, and other closing costs you’ll typically have to pay. You also have to hope someone comes along at the right time to buy when you’re ready to sell — which isn’t always the case.
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