I grew up moving from place to place around the states. Because we were constantly moving, we normally rented a home instead of purchasing one. But rent is not cheap! This is probably the #1 benefit to buying a home, most mortgages are less than rent. (The only issue is, you usually need a minimum of about 3% of the purchase price saved up to get a mortgage and purchase a home.)
When my husband and I got married, we rented a home in Dearborn. It was a nice 3 bedroom home with a full finished basement. It was about $1,000 a month which is a steal! After a year of dealing with several home improvement issues and commuting about 30 minutes to socialize with friends or get to work, we decided it was time for a change. We then moved to a one bedroom apartment in Farmington Hills. The change in size was major but the price only went down by a few hundred bucks.
There is a lot more than the cost of rent to consider when signing a lease. You have to think about the gas, electric, water, cable, parking, maintenance, and more. Some apartments and homes include a few of these costs in the rent, but be sure to ask!
Rent is different depending on location, but it’s interesting that minimum wage and average rent don't always meet eye to eye. Huffington Post wrote an entire article breaking down minimum wage requirements and comparing them to the average cost of housing. Check out the article from 2015 here.
Yes, rent is expensive. But there are smart ways to cut down the costs. Here are a few ideas I threw together.
1. Live at home longer to save. Use the money for a down payment or as a “cash stash” for rent payments.
2. Get a roommate (or two or three!) who will actually pay part of the rent. No moochers allowed.
3. Stop eating out. Put that kitchen you pay for to good use.
4. Stop going to hang out at the mall. Consignment shops are your friend! Better yet, shop online where you can scour the Internet for the best deals and coupons.
5. If you buy a home in a great location, consider getting involved with AirBnB. You can rent out your home, or a room in your home to people who have extended stays in your town. This might be too weird for some people, but if you’re feeling adventurous, it’s a great way to generate extra income.
6. Adjust your expectations and lifestyle to fit your budget. Don’t go all out on that loft in the city if you know you will only be able to afford ramen noodles after paying the rent. You won’t be able to enjoy living in such a nice area without disposable income to spend there!
Are you thinking about buying a home? Call Michigan First Mortgage today and get your questions answered.
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