Mailbag Monday: Rent or Buy? - Jean Chatzky - Making money make sense
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Mailbag Monday: Rent or Buy?

iStock_000019551430SmallI am a widow in my 50’s and I have no debt. I have a pension from my husband every month and i just got a part-time job after being on unemployment. My question is I have some savings — should I try and buy a house or continue renting? I live in San Diego, but am originally from the east coast and would like to move closer to family.

— Dee

A lot of people are suddenly feeling the rush to buy a home, now that interest rates are pretty clearly headed up. But that’s not necessarily the best move, and it doesn’t appear to be the best move in your case — I certainly wouldn’t purchase a home now if you are planning to move to the east coast in the near future.

When your life’s plan is in flux — you’re not sure where you’ll be in a year, or even five years; you’re unemployed or thinking of changing jobs — you’re better off renting. I say this even though research tells us that it is still cheaper to buy than rent in many parts of the country. (San Diego can fall into this bucket, according to this graphic, from Trulia, which may be worth a look.)

However, that data is hinging on you staying in the home for a while. If you’re not prepared to do that — and it sounds like you aren’t — renting is a better fit for your situation. This is particularly true if you’re still looking for full-time work, and flexible about where job opportunities might take you. Renting allows you to maintain that flexibility, so you can move if you land a job in another area or trade up if you land a full-time job and with it, the ability to spend more on housing.

So, for the time being, I would rent something inexpensive and continue to save. That way, if you do decide to move and you want to buy a home in which to live out your retirement, you’ll have a nice fat down payment ready – or even the ability to purchase it outright.

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