Why you should rent

Renting Means No Down Payment

Renters rarely have to put more than the first month’s rent down, as well as a security deposit (which, if all goes well, you may get back anyway). But, more often than not, a down payment on a house will be between 5-20% of the asking price. Depending on the current price of the home you’re looking to buy, this could mean tens of thousands of dollars.

In a perfect world, that down payment would become equity but, as I’ll explain below, that outcome doesn’t always happen. If you want to turn your down payment into an investment, there are many ways to do that besides buying a home. Plus, if you buy a home you’ll also need to have extra money set aside for any unexpected costs that come up during the process of moving in (such as repairs that were not identified prior to the sale of the house).

Renting Means Less Risk

Risk seems to be the most commonly overlooked factor when someone is considering buying a home. It’s something I ignored too when I purchased my first home at 23 years old. The risk that comes with homeownership is high for several reasons:

• If you’re married and base your mortgage payments on two incomes, you’re in lala land if you don’t factor in the possibility of losing one or both of your incomes.
• Homeowners face a good possibility of being foreclosed on, while renters face zero percent chance of foreclosure.
• You’re at the mercy of the housing market. As seen during the recent housing collapse, when you can’t pay cash for a home, you end up running the risk of owing the bank more money than the house is even worth.

Renting Means More Money in Your Pocket

Rent is often a fixed expense. Many people think that the monthly cost of owning a home is similar to the cost of renting, but often that’s not true. For one thing, the cost of renter’s insurance is significantly less than the cost of homeowner’s insurance. Unfortunately, many people don’t accurately calculate the true cost of purchasing real estate. Homeowners need to budget for expenses like property taxes, homeowner association (HOA) fees, repairs, and lawn maintenance just to name a few.

The true cost of owning a home can be surprising, especially for a single person or couple just starting out on their own. There are also the extra expenses that pop up which inexperienced homeowners are not familiar with. All of these extra costs are avoided when you choose to rent instead of buy – which means more money in your pocket.