Renting vs. Buying

Today we are pleased to welcome Carolyn Lesmeister as a guest blogger as part of COMPASS’ series of reflections about renting, buying and mortgages. If you missed the previous posts in the series by Matthew DeBall and Timothy Siburg, check those out also and join the conversation. 

When my husband and I finished graduate school and moved from the San Francisco Bay area to small-town Indiana, we experienced housing “sticker shock.” For 2/3 of what we’d paid to rent a one-bedroom apartment in Berkeley, we were able to rent a house eight times its size. Our former apartment – in its entirety – could have fit into the formal living room, with room to spare.

It’s possible that the dramatic price drop went to our heads. The two of us rented a four-bedroom house. Our cat basically ended up with his own room. (Yes, our cat.) We didn’t need that much space, but we could easily afford it, so we went a little crazy.

Renting certainly had its perks. It let us stay flexible when we were unsure how stable our jobs were and how long we’d be in one place. It allowed us to learn that it’s hard for two people who work full-time to keep a large house clean. (The cat never did learn how to pick up his toys!) Renting kept us from being tied to a property in a place where the housing market was stagnant.

When you and your landlord don't share maintenance priorities, you sometimes end up learning interesting skills, like how to sweet-talk bats into pillowcases.

When you and your landlord don’t share maintenance priorities, you sometimes end up learning interesting skills, like how to sweet-talk bats into pillowcases.

Most importantly, renting meant that when something went wrong – like when the furnace started making explosion noises and shaking the entire house – all we had to do was call our landlord and let her deal with it. We didn’t have to find a repairman, and we didn’t have to pay the bill.

The downside was that our landlord didn’t always share our perspective on what repairs were necessary. She didn’t seem concerned when we told her that small panes of glass had fallen out of one of the attic windows. As a result, I became an expert at safely and humanely removing bats from our living quarters. We had to learn to live with whatever issues our landlord didn’t fix.

About a year ago, our personal and professional circumstances required us to relocate to downtown Indianapolis. Initially we looked for places to rent but soon discovered that the monthly mortgage payments on a nice house would be less than the going rent (often for not-so-nice places) in the area. As a neighbor quipped, “It’s an up-and-coming neighborhood, but the landlords around here seem to think it up-and-came.”

So, we ventured into the fascinating and sometimes terrifying world of buying a house. We considered multiple options when we applied for our mortgage, including a community-based nonprofit that focused on loans for low-income first-time homeowners, a large national bank with some good incentives, and even the mortgage affiliate of our real estate agency. Each had its own perks and its own drawbacks … and its own qualification requirements.

The process had some bumps, but it worked out, and we bought a lovely, two-bedroom, 112-year-old craftsman style house within two miles of the city center. We downsized to a much more manageable house that suits our needs.

One of the "perks" of homeownership is making your house your own. Days off become occassions for spackling, painting, and doing maintenance work.

One of the “perks” of homeownership is making your house your own. Days off become occassions for spackling, painting, and doing maintenance work.

The nice thing about home ownership is that we have complete control over our space. We can paint, update, and landscape to our heart’s content. The downside is that when things go wrong now – like when the kitchen sink detached itself from the counter and tried to fall off – we have to deal with it ourselves. We made half a dozen phone calls before finding someone willing to try and fix that one.

We find ourselves more committed to our community, too. Buying a home – for us – means making a long-term investment in our neighborhood and our city. We care about our local businesses, schools, and community organizations, and we are investing in them even more than we did when we rented in other places.

Since we moved, the words God spoke to Jeremiah keep echoing in my mind, “Work for the peace and prosperity of the city to which I have sent you, and pray to the Lord on its behalf, for its welfare will determine your welfare.” (Jer. 29:7)

Renting was a great option for my husband and me when we first started out – and if we’d stayed in California it might have been our only option – but we are enjoying the blessings and challenges of homeownership in this new phase of life.

lesmeister headshotAbout the Author: Carolyn Lesmeister serves alongside her husband as the pastoral team for a unique rural-urban ecumenical ministry cooperative in central Indiana. She’s passionate about loving God and God’s people and is crazy enough to think that faith ought to affect every aspect of a person’s life. She strives to live that way on a daily basis and constantly seeks forgiveness for the ways in which she falls short.

This blog is a component of the Ecumenical Stewardship Center’s COMPASS initiative to engage young adults in conversations about faith and finances. Like what you see and want to know/do more? Visit the COMPASS web page and join the COMPASS community on Facebook.

Becoming a Home Owner

It is our privilege to welcome Matt DeBall to the blog as a guest blogger. Today he offers his personal experiences and reflections about “Becoming a Home Owner” as part COMPASS’ current series of posts about ownership, renting and mortgages.

When my wife and I were first married, we didn’t know where we wanted to live. After working part-time jobs through college, we were both in search of full-time employment for the first time, and were looking for work within 25 miles of school. The factors of employment location and the uncertainty of where to settle down led us to start renting a townhouse near school.

For our first year of marriage, renting served us well. Starting out with a rental property rather than buying one helped us to save money, become established in full-time jobs, and pinpoint areas where we wanted to live more permanently. Since we both grew up in nice, medium-sized homes with both parents and one or two siblings, our goal was to buy something similar in preparing to have a family of our own someday. As we looked at homes, we found that fully updated homes of the size we wanted were either near the top or out of our price range, so we narrowed our search to homes that were structurally sound but needed updating.

Our new home with our dog Watson, stealing the show.

Our new home with our dog Watson, stealing the show.

Having both rented a townhouse and now owning our own home, there are two reasons why I prefer owning. First, in our own home, we are able to personalize our living space and make it something we’re excited about. As we rented, we were restricted by the guidelines of the landlord in the ways that we could change the colors, décor, and layout. Now that we’re in a space of our own, we are able to paint, decorate, and update however we’d like. There’s much more freedom in changing a home when the property belongs to you rather than someone else. Second, buying a home feels more like an investment than renting. While we appreciated the lower risk of renting, we recognized that paying a mortgage for a house was only slightly more expensive than our renting cost. Spending money to buy a house and pay a mortgage gave us a return for our investment.

Since going through the process of buying a house, we have a few suggestions about mortgages:

1) Find a mortgage company you can trust – This is not to say that mortgage companies are deceptive, but each one helps first-time home-buyers slightly differently, and one company’s practices may suit you better than another. You will probably be paying money to your mortgage company for at least ten years, and having a good relationship can make the buying process run more smoothly and prevent headaches afterwards.

2) Plan to pay well within your budget – Whether applying for a 15 year or 30 year loan, plan to pay for a house within your means. I’ve heard the guideline that no more than 40% of your income should be paid toward a mortgage payment, but if you are able to pay considerably less you’ll have more money to add improvements to the house and plan for upcoming, unplanned expenses.

3) Keep the extra mortgage insurance in mind – Especially for young couples who are still paying off student loans, putting a down payment on a house for 20% of its value will be rather difficult. However, a lower down payment is possible but typically involves the extra expense of mortgage insurance. While this isn’t much, it is an added expense that will drop off once a certain percentage of the mortgage is paid. Paying this off sooner rather than later will save you a good chunk of change.

4) Make an extra payment each year – We’ve heard the suggestion on several occasions to pay a little extra toward our mortgage each year. This can either include adding extra in each monthly payment or choosing to make one extra payment at the beginning or end of the year. By paying more toward your mortgage each year, this will help knock down the incurred interest on your loan and decrease the timeline for paying off your loan.

Whether choosing to rent or buy a home, there are always risks and difficulties involved. Whenever making important decisions about finances, it has been very helpful for me to remember that everything belongs to the Lord, and that our ultimate trust should be in God not in money. While we may change jobs or move to another place, we are always secure and at home in the love of God.

Matt DeBallAbout the Author: Matt DeBall serves as an assistant to Donor Relations and Communications for the Church of the Brethren. In pursuit of a Master of Divinity from Northern Seminary, Matt is passionate about personal and congregational stewardship and emphasizing how Scripture is relevant for today. He lives with his wife (Chelsea) and their Welsh Corgi (Watson) in northern Illinois.

This blog is a component of the Ecumenical Stewardship Center’s COMPASS initiative to engage young adults in conversations about faith and finances. Like what you see and want to know/do more? Visit the COMPASS web page and join the COMPASS community on Facebook.

Millennials, Renting & Home Ownership

Some reflections by Timothy Siburg

Growing up, this might have been a sort of dream house I envisioned. What might your dream house look like?

Growing up, this might have been a sort of dream house I envisioned. What might your dream house look like?

In junior high, I loved math. I couldn’t get enough of Algebra and Geometry. I look back fondly on a project where my classmates and I used geometry, algebra and pre-calculus to design our dream houses. I think everyone’s dream house was some crazy sized mansion with sport courts, beach access, and its own movie theater. Mine was no different. As a seventh grader I imagined my home someday would be that mansion of sorts far bigger than the nice home I grew up in. My, how times have changed.

Fast forward about fifteen years, I’m a married millennial with a couple graduate degrees. Together my wife and I are renting our second apartment since being married. I don’t think this is a completely abnormal experience for people about our age.

Some of my friends are proud home owners. I’m proud of them of being able and willing to make that investment. At the same time, many other friends live in apartments, or share space with their families or friends as roommates. Some other friends who have graduate degrees have gone “back home” to live with their parents in order to save some money and work while looking and wondering what the next chapter of their life will look like.

This wide range of perspectives speaks to a growing norm in our economy. It’s becoming more and more common for people to need to move (and often) for work, and because the average person will work in more than ten different jobs in their lifetime, it’s no longer a held assumption for all millennials and young adults that they will own a home.

A look inside my wife's and my first apartment.

A look inside my wife’s and my first apartment.

Some suggest this is because young adults view renting as better than owning. I am not sure that this is actually the case. I think it has more to do with a desire to be able to be more mobile, or a sense that one’s life situation is far from concrete in their current setting.

Someday my wife and I would like to own a home. Maybe that day will be coming sooner rather than later? It’s not likely to come though until our job situations are a bit more stable. Together as a couple we have discerned that if we can make it work with our budget and savings, we are okay renting for now. Long term it would be nice to have a sort of small or medium sized home base. But we both love to travel- for work and pleasure, so we don’t think we’ll need the larger sort of house I grew up in.

It’s a little sad to think that we can’t envision living in as nice a home as the one we grew up in. But at the same time, the idea from prior generations that the size of your home represents your status in life and wealth doesn’t really appeal to us. The size of our home doesn’t really have a high value for us. It’s more important to be able to give, live and serve out of which God has entrusted us. My sense is that this may be true for many others of our generation.

What do you think? What are your thoughts and experiences regarding renting and owning?

Image CreditDream Home.

About the author: Timothy Siburg currently serves as a Communications Associate for Ecumenical Stewardship Center and the COMPASS Initiative. He is happily married to his wife Allison, holds a couple MA degrees, and currently calls Minnesota home. You can read more about him and some of the other questions he wrestles with at his own blog.

This blog is a component of the Ecumenical Stewardship Center’s COMPASS initiative to engage young adults in conversations about faith and finances. Like what you see and want to know/do more? Visit the COMPASS web page and join the COMPASS community on Facebook.