Owning a home is the American Dream and being a home owner definitely has its advantages. However, it’s not for everyone. Choosing to rent has financial advantages that might be a better fit for both your bank account and your lifestyle.
Advantages of Renting
I often hear renters complain about being financially locked into a 1-2 year lease. They want the freedom to pick up and go if they decide to relocate. However, that is exactly what renting offers. The alternative is a 15 or 30 year mortgage on a home. Obviously, renting offers far more freedoms than buying in this area.
Renting also provides a low-cost investment up front. Typically, all you need to worry about is covering the first and last months rent and possibly an additional security deposit on animals. Compared to the costs of putting a down payment on a home, this is a drop in the bucket. Also, if you live in an area where homes tend to be priced unreasonably high, your rent could be half of what your monthly mortgage payments would be.
As a renter you are not obligated to make repairs that are common to home owners. When the central air unit in a home goes out the owner is suddenly hit with an unexpected cost in the thousands. When a renter needs something repaired they simply need to contact their landlord and inform them of what needs fixed.
For those renting apartments or condos, you don’t have the routine expenses of maintenance. You do not have to worry about things like mowing the lawn or shoveling snow in the winter. Any home owner will tell you that landscaping can be both time consuming and/or expensive.
The housing market is always fluctuating. The amount you owe on your home could very well be more than what it’s actually worth. If a renter needs to relocate for a new job or upsize for a growing family, the cost is relatively low. In the same situation, a home owner might find themselves stuck, unable to sell there home.
So, while buying a home might be the American Dream, it might not be your dream. Look at the advantages of renting and see if it’s the right choice for you.