Buying a House
It’s no secret that buying a house is one of the most taxing life events. One poll found that people felt the home-buying process was more stressful than bankruptcy, now more than ever. The housing bubble of the mid-2000s showed us how perilous buying a home could be, which has discouraged a lot of young people from buying a home. But it doesn’t have to.
Buying a home still carries a lot of advantages and is a worthwhile pursuit. We teach the home-buying process as a central part of Banzai Plus, our advanced course for ages 16 and up, but we’re also honest about it; buying a home is not the right living arrangement for everyone. Some wonder whether they should rent or buy, or whether they have the income to sustain mortgage payments comfortably.
Rent or Buy?
It depends. Players of Teen are given the expectation that they’ll be renting while they’re in college; that’s normal. But what about after graduation, or when they get that first stable job?
There are benefits to buying.
- The market for single-family dwellings is larger, which brings more options.
- Your house is just that—yours. You can paint when you want, replace the appliances you want, or knock a wall down. That kind of freedom is hard to put a price tag on.
- Long-term savings are another benefit. Few primary residences will turn into investments, but if you stay put, you can save money in the long run
There are also trade-offs.
- Depending on your mortgage, the economic benefits of buying often don’t kick in until you’ve lived in your house for a few years. Plus teaches players about the nature of amortized loans—that they will bear the interest burden up front.
- Insurance and taxes can be a significant cost every month, often in the hundreds of dollars, a fact that catches many new homeowners off guard.
Renting is sometimes the right answer.
- Renters are often more mobile and save a lot of money on moving costs. If you’re single or moving around a lot, you have flexibility that way. In Plus, players learn about this concept.
You save yourself the temptation of add-ons to your home, since you’re renting and don’t often have the choice. Many homeowners make the mistake of thinking that building that new addition or replacing the kitchen counters will actually add enough value to their home so they can profit from the equity build-up if they sell their home. The reality is that it’s very rare for those kinds of so-called investments to actually pay off financially.
Renting, like owning a home, has its trade-offs.
- If your income is high enough that you could afford a home, you will spend more in the long run to rent. Homeowners who aggressively pay down their mortgage experience much more financial freedom in later years.
- Renting gives you less freedom in other ways. You don’t have as many options for how you live inside the house or apartment you’re renting. Landlords sometimes have rules about pets, roommates, and even where you park your car.
Many prospective homeowners need a mortgage to buy a home; that’s just a fact. To give players in Plus a better perspective on how to choose a home based on their income, they meet with a real estate agent at the beginning of the course, to discuss their options.
If players save up enough for the 20-percent down payment on the home they chose, they win the game. If not, they can always choose a different house or play again.
It’s often difficult for first-time players to win the game, and that’s the way we like it. Unforeseen obstacles can get in the way of saving, but some of those obstacles can be prepared for. And financial trade-offs affect just about every decision players are faced with. We want Banzai to be hard, because it instills not only a greater respect for money and finances but also a real perspective of what to expect in adult life.