Mar 28, 2006
Students must choose best fit for housing
by Joy Abbott
While graduation is just around the corner, “senioritis” leaves many sick of the dorms, campus life and younger roommates. The thought of finally getting out on their own has many of these students ecstatic, but the decision to rent or buy a house leaves many scratching their heads.
A number of students choose to buy a home after college. Real estate has proven potential to be a good investment, leaving some to prefer buying a house to investing in the stock market.
GinnieMea.gov offers a buying versus renting comparison chart. Building equity is at the top of the list of advantages for purchasing.
The GinnieMea Web site offers a calculator to help estimate the cost of renting versus buying. The calculator considers private mortgage insurance, homeowners insurance cost, loan closing cost, cost of selling a home, property tax, homeowners tax saving and rent increases to estimate the cost.
The calculator is set to compare the cost of renting at $750 a month to buying a $150,000 home. It assumes that after a 10 percent down payment, the buyer gets a 30-year loan with a 7.5 percent interest rate. Figuring that the buyer stays in the home for 10 years, he can save as much $34,000.
While financial considerations are one of the main reasons many students choose to buy, it’s also why many students decide to rent. Even if students can save enough money for a down payment and closing costs, there is often not enough money left to cover emergencies like a broken water heater.
Laura Honnel is a senior at Liberty University who sees the pros and cons of renting. “I’m putting money into something I can’t keep. However, I like the idea that if I break something I’m not responsible for having it fixed,” said Honnel.
Saving the money for the down payment and closing costs is something that is not always easy for college students, not to mention the “extra” costs included in owning a house. Home owners are required to pay property taxes and are responsible for all their own maintenance, something that can put a dent in the family budget. A broken hot water heaters can cost anywhere from $200 to more than $1,000 to replace at Sears. This cost doesn’t include installment. And that’s just one of an infinite number of things that can go wrong with a home.
According to a local rental agency, maintenance is the main reason many students choose to rent.
Buying a home typically means the purchaser plans on staying in the area for a while. Some find this an appealing idea while others prefer the flexibility of renting.
“I like that it’s not permanent. I can walk away when my lease is up,” said Honnel.
Finances aren’t the only thing students are considering when it comes to buying or renting. If the buyer stays in a home for only five years instead of 10, the savings drop to roughly $7,000. Many students getting married find this stability a perk. For the student unsure of his or her plans for the future, the time commitment involved in buying can be scarier than the financial commitment.
Contact Joy Abbott at firstname.lastname@example.org.
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