Is it Better to Rent or Buy a House?

How you choose to live is an ongoing, long-term decision, with plenty of costs and plenty of unknowns. Let's dig into some of the factors that play into the buy vs. rent discussion.

By Tiffany Holden. All real estate blog posts are written by licensed professionals without the aid of AI, from our real experience & expertise. Also, this particular blog post is written for first-time homebuyers with 3-10% down payments (i.e. normal people), rather than someone moving into the area with oodles of cash from a home sale elsewhere.

General Principle

If this a short-term stop: rent

If you’ll be around for the long-term: work towards buying

Ask yourself: do I see myself living in this area longterm?

Bellingham is one of those communities that people visit and never want to leave. As a growing town, we have a beautiful quality of life (growing pains nonetheless) that emphasizes health, community, the outdoors, and being chill (more or less). If you’re just here as a landing pad for a couple years to finish up your degree, or grew up in the area but can’t wait to get out, it might make sense to hold off on putting down deep financial roots in the area. 

On the other hand, if you’re planning on being here for several years and/or the foreseeable longterm future, consider how you can best park your cash in a longer-term investment. 

Ask yourself: do I have any major life changes on the horizon?

If you can foresee big life changes in the next two years, it might make more sense to stay put in your current situation. Weddings, divorces, major job changes - these could all prompt you to relocate out of the area. Two years on a financed home might not build enough equity to offset the (often) higher mortgage payment for such a short term.  (Yes, you could rent out your house; just run some hypothetical numbers. Many first-time home buyer mortgage payments are significantly higher than what that home could rent for, because we’re usually not putting 10-20% down).

Are you making financial freedom a priority AND planning to stick around?

Around the CGNW office I often say, “at the end of the day, we all need a place to park our butt.” These decisions have to be taken in the context of our whole lives, and allowed to not always have an “investment advantage” or ROI.  A wise home purchase provides that home base for you, allowing you to build equity and appreciation bit by bit. After that, your budgeting and frugality/prioritization will determine what additional funds you can apply to future real estate investments, investing in index funds, growing your own business or side hustle, or any other vehicle towards financial freedom. 

Additional thoughts

Also, it’s important to recognize that what you should do from a longterm standpoint and what you can do right now are two different questions. I rented for 6 years before I had the ability to buy, but along the way, my goals and priorities were leaning in the homeownership direction. So if you’re budgeting and saving for a house but you know renting is in your foreseeable future, that’s okay. 

Lastly, whether you actively choose to remain renting, or rent until you can pursue homeownership, there are pros and cons. Owning real estate comes with a list of maintenance and repair costs, property taxes and insurance, and having your net worth tied up in an asset that’s not easily liquidated. Renting comes with uncertainty and rising rental costs, and inability to make significant changes to your space. 

This is written in general terms; all of our needs, priorities, and goals are complex and changing. We always recommend getting down to brass tacks and talking through your specific situation and financials with a qualified mortgage loan officer and real estate professional. It’s okay if you know you won’t be ready to move for awhile! I had my first sit-down with my loan officer more than a year before I could actually get going, and that conversation gave me action steps that helped be be a stronger borrower. 

It’s important to navigate this decision by remembering that this isn’t just a thought exercise about what is the “most something” (practical, affordable, normal, convenient, etc); it’s a very real ongoing decision about where you (and perhaps others) will have as home base. 

Questions? Reach out to us at team@cohengroupnw.com or call our office at 360.389.3894 and let’s start the conversation!