Buy or rent?

To inform, to amuse, and to help you make money

Q

Is it crazy to buy a home if there's a good chance I'll move in a few years? — F.P., Lafayette, Colorado

A

Think twice about doing so. For one thing, you can't be sure that the home will increase in value in a short period, and you don't want to have to sell for a loss, perhaps owing more than the home is worth. Remember to factor closing costs into your calculations. They typically average 2% of the home's value — and could range from $2,000 to $8,000 or more. Then there are real estate agent commissions, often 5% or 6% of the home's value, generally paid by the seller.

Given all that, you'll clearly pay a lot to buy and then sell your home. What's more, your monthly mortgage payments in the loan's early years will mostly be interest, not paying down the principal owed, so you won't be building equity. And while you own the home, you'll incur costs for insurance, property taxes and maintenance and repairs.

Consider just renting a home instead. If your rent is less than your costs as a homeowner would be, you'll be able to save and invest the difference and build a little nest egg for retirement or for a future down payment on a home.

A rent-or-buy calculator such as the one at Calculator.net/rent-vsbuy-calculator.html can help you decide.

Q

Did Social Security benefits increase in 2024?

— S.S., Eagle, Idaho

A

They sure did. Most years feature a Social Security cost-of-living adjustment (COLA), and for 2024, the increase is 3.2%. Inflation has been significant in recent years, resulting in an 8.7% COLA last year and a 5.9% adjustment the year before.