For most people, buying a home is the largest financial decision they will ever make.
Whether you pay with cash or take out a mortgage, you’ll probably spend hundreds of thousands of dollars on your living situation over the course of your lifetime.
When it comes to buying a home, the key is knowing when it’s actually the right time to buy one. Sometimes you’ll be better off renting for a few years to prepare yourself for the financial reality of a mortgage.
With that in mind, let’s take a look at when it might make more sense to rent.
1. When you’re fresh out of college.
It’s simply not smart to buy a house when you’re just out of school. You have too many unknowns to think about—like where you’ll work, whether you’re in a relationship, and whether you really have enough money for a mortgage in the first place. You have so many transitions and changes after graduation that the last thing you need is to be tied down to a house.
2. When you’re moving to a new city.
I can’t tell you how many times I’ve heard of people who move to a new city and buy a house right away, only to realize later that they would rather live in another part of town. By renting for a year after you move, you can learn about all the different areas of town and decide which one best fits your needs and budget.
3. When you’re a newlywed.
I always recommend waiting a minimum of one year after you’re married to buy a house. Just like the other situations, newlyweds have so many transitions early on. Job and income situations may change from year to year, so locking into a mortgage probably isn’t a smart idea.
Related: 7 Money Tips for Newlyweds
Now, are there exceptions to these situations? Of course!
If you’re an older newlywed who has owned a house for a while, then it makes perfect sense for your spouse to move in after you’re married.
If you’re already familiar with the town you are moving to, and if you’ve already saved a down payment, then there’s nothing wrong with buying a house after your move.
There are always exceptions. The key is to make smart long-term decisions with your hard-earned money. And when you know that you’re both emotionally and financially ready to buy a home, it’s important to work with a real estate agent that you can trust. They’ll help you find the best home for you and your budget.
Don’t buy into the perception that renting is somehow a bad idea. You’re not wasting money you could use on a mortgage. Instead, you’re showing patience, discipline and good stewardship of your income.
Remember, your goal is not just to buy a house—it’s also to make a good investment. You should never buy a house simply because you can. You want to find the situation that works best for you.
Related: Are You Ready to Buy a Home?
If you jump into a mortgage before you’re ready, you could make a major financial mistake that could set you back years.