Renting vs Buying: The Everlasting Debate

If only I could afford to live here…

A couple days ago, while my friends and I were traveling for work, we got on the subject of money. One of my friends is a homeowner (partially, since he has a mortgage), and we were having the classic rent vs buy debate. He claimed that getting a VA loan (a 30 year loan that does not require a down payment) was cheaper than paying rent. On paper, he could be right, but I told him I’d rather rent myself a nice apartment then break my lease each time I deploy to pocket the extra money. I also told him I’d rather not have the hassle of maintaining the home, since I’d never want to dip below my 50% investing rate as a fraction of my gross income.

We also got into the topic of investing, and my friend already knew that I preferred diversified, low-cost index funds. Now, my friend is about 3 years older than me, and claimed that I had a higher net worth than him. I asked him: “If home ownership were so great, how come everyone that has a mortgage isn’t rich?” Now, I’m sure that statement will stirrup some controversy. Many financial bloggers have already written about this topic. I’m not against owning a home, I just think people jump into it too quick. I personally have no desire to own a home right now due to my employment in the armed forces, which comes with frequent moves around the country.

I think what my friend wanted to say was that I would be better off getting a VA loan, since that would give me an little more of an edge over my already aggressive saving. However, I would rather not bother with the hassle of buying a home only to sell it a few years later when I get orders somewhere else. I would rather wait until I know I’ll be in one place for a long time, then I can really dedicate myself to home ownership without worrying about moving out soon.

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