A (Slightly) New Take on Buying Versus Renting

• September 1st 2009

by Mark Wellborn

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Articles that provide perspective on whether or not twenty and thirty-somethings should buy a home or not seem to be a dime a dozen these days. A recent piece in The Wall Street Journal covers much of the same ground, but it also puts forth a few ideas that other articles have overlooked.

For example, in order to see if a prospective buyer can handle the monthly payments associated with home ownership, the article recommends “practice payments.”

From the WSJ:

“Each month, set aside projected mortgage and property-tax payments, maintenance costs, utilities and any other home-related expenses into a separate savings account, says Gary Smola, a certified financial planner with financial-educational firm Financial Finesse.”

The article also touches on price-to-rent ratios, a topic that UrbanTurf covered not long ago. Very simply, the ratio works like this: Buyers should divide the price of the home they want to buy by the total cost of rent for a year. If the score is above 20, the article notes that the price of the home is likely to fall in the near future. If it is below 15, chances are the price will remain stable.

To read the full article, click here.

This article originally published at https://dc.urbanturf.com/articles/blog/a_slightly_new_take_on_buying_versus_renting/1270.