The decision to rent or buy your home should be carefully considered. Many people who want to become homeowners simply state that they are tired of wasting money on rent so a landlord can profit from them, but there are many factors to consider before you make your decision to buy based only on financial reasons.
Even the financial reasons should be carefully thought out and planned for; owning a home will cost a lot more than just the house payment. Owning a home is also a commitment to big responsibility and a lot of work.
In many cases, renting can be the better choice:
- Renting your home gives you the freedom to leave anytime you want, at least after the lease is up. You won’t have to hire a real estate agent to sell your home for you, and you won’t have to worry about being stuck with your home if the real estate market is slow. If your job requires you to relocate, renting might be the safer choice.
- Renting gives you the flexibility to change your mind. If you get a place in an area you later realize you don’t like, or need a bigger home due to a growing family size, you can leave and find a new place without much hassle.
- Renting saves you the time and money involved in repairs and maintenance of the property. If something breaks, you simply call the landlord with your complaint and he will fix it.
- Renting guarantees a fixed expense. Every homeowner should keep money in an emergency fund for needed last-minute repairs. If you own a home, you never know when the furnace could go out or the air-conditioner could fail. Renting saves you those worries and you can spend that money on other things.
- Renting saves you the stress of worrying about real-estate market fluctuations. While many homeowners happily watch their homes go up in value, there’s always a possibility that a home will someday be worth less than the purchase price. Losing money when you sell a big-ticket item like a house can easily cost many thousands of dollars.
- Renting saves you the money that homeowners spend on improvements. Homeowners love to garden, build decks, put up fences, paint rooms, and change light fixtures. If a homeowner doesn’t have anything to fix, most likely they are at the home and garden store looking for a way to improve their home, and spending lots of money doing it.
- Renting an apartment is an inexpensive way to have access to incredible amenities. Golf courses, swimming pools, hot tubs, tennis courts, and fitness centers are often available for little or no additional cost. Some apartment complexes have social clubs and gatherings, strengthening the sense of community.
- Renting can give you practice in following a budget before you commit to something that can severely damage your credit score. If you rent and realize you can’t really afford the place, you can easily downsize when your lease is up. If you find out you bit off more than you can chew after purchasing, you may lose your home to foreclosure, and that can ruin your credit and hurt your chances of buying in the future.
- Renting a house will give you a chance to “test-drive” being responsible for a home if you are used to apartment living. Most likely you will be responsible for lawn maintenance, leaf and snow removal, gutter cleaning, and for paying all the utilities. You might find that the additional time and money in home upkeep is not for you.
- Renting can give you time to save for a bigger down payment on a house, and give you time to increase your income. You might be expecting a big promotion; waiting until then can help make homeownership more affordable for you. A bigger down payment can be used to reduce the amount of the mortgage, or can be used to buy a better home.
- Renting can give you time to improve your credit score. We’ve all heard or read the ads that tell us anybody can rent-to-buy or get a home with creative financing, regardless of credit history. It may be true, but those loan terms are not in the best interest of the borrower. These finance methods take advantage of people who can’t get better financing. Improve your credit score so you can get a traditional loan with terms that are fair to you.
- Renting can give you a chance to pay off other debts before you take on one more big debt. Lenders look at your current income and expenses to determine how much of a mortgage they’ll approve you for. Credit cards, car loans, student loans, personal loans, and other liabilities will reduce the amount of mortgage you can get. Pay them off so you can get a bigger loan for a better house.