Rent or Own?

Posted by: Michael S. | Jan 17,2008


Home ownership is the next big step after getting married.  So is having a child but it runs about 50/50 which people do first.  Many newlywed couples buy a home to set up shop for having a child.  Others save their money to deal with the expense of having a child.  It’s such a great unknown to have a child that some couples take a wait and see attitude before buying a house.

I think this is a good idea even if you buy a home first.  It sounds a little pessimistic to say that newlyweds need to “test the waters” of marriage.  After all, you chose to get married, you’re in love, and you made a commitment to be together for life.  Still, marriage is very different than an engagement.  During an engagement, the pressing details of the future don’t often come up. Very often, the main topic of conversation leading up to the wedding is the wedding itself.  Of course, there are a lot of marriages that come at the tail end of a long relationship – maybe even a five year span when you lived together.  Still, this is a different proposition than marriage when you’ve made such a strong commitment.  

For this reason, renting during the early years of the marriage does make sense.  It’ll give you both time to get comfortable in the marriage and deal with certain financial issues.  The longer you wait to buy a home, the more you can save up for a down payment.  In this housing climate in which lenders are suffering, it may make better sense to wait.  Although there are instances where lenders are so hurting for money that you can get a good deal on a mortgage. Most often, a sizable down payment and a longer credit history will work most in your favor.  

Sometimes it makes total practical sense, rather than just a case of “getting to know each other.”  Before buying a home you need to get your debt to income ratio to a place where your debt is under 35% of your overall income.  This can take several years at the beginning of the marriage, depending upon expenses and income.  What it boils down to is that you don’t want to jump into home buying too soon.  Your first financial projects as a married couple should be getting your collective finances in order.  During this time, renting makes sense.

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