Buying a Home Isn’t Always the Best – Here’s When You Should Rent
I was unfamiliar with the concept of “starter homes,” before I ended up owning. I actually rented two smaller houses before I saved enough money to buy my own house. Who doesn’t dream of home ownership? Owning a home is part of the American ideal of self-sustainability and independence. But the road to homeownership is a slow one, often paved with sacrifice.
Home ownership is an incredible responsibility. Most people don’t fully grasp the responsibilities and complexities of home ownership until they own one. Or, are about to experience foreclosure. You must be financially stable and committed to living in one location for decades to own a home.
Rent vs Buy – Which One is Best?
Not many people can afford to buy their first home. They may be too financially unstable. They might move around a lot. Not everyone can handle the strenuous responsibilities of maintenance and upkeep. There is nothing wrong with renting a home, at least until your life circumstances permit you the ability to buy. Debating between rent vs buy? Here are some reasons renting might be the better option for you.
Renting a Home Is Less Financially Strenuous
It might take years to save enough money to own a home. Or to build enough financial stability to qualify for a loan. The average mortgage payment is about $1,000. It can easily be double that amount or more, depending on the property value. You will need to dedicate up to 14% or more of your monthly income to mortgage payments.
The interest on the mortgage may represent hundreds of dollars of each payment. A homeowner must contend with property taxes and various kinds of insurance premiums. You may have to pay separate policies for wind, flood and earthquake damage. Then there are the bills for septic tank services and fees for water service.
This is just a sampling of all the bills that a homeowner deals with on a daily, weekly, seasonal and annual basis. If you rent a home, you may only be responsible for a few hundred dollars a month in rent. That might be preferable until you are ready to own and can then pay thousands of dollars per month in mortgage and other associated payments.
If you rent a home and encounter maintenance issues, you can refer to the homeowner. You just may not have enough time to deal with such issues. When you own a home, you are the one responsible for maintenance. Several hours a day and entire weekends will be devoted to fixing leaks, repairing the roof, broken water heater or problems.
You must inspect your home regularly to spot problems, like mold, termites, pest invasions before they develop. As a renter, you can refer these issues to the homeowner. However, as an owner, you must deal with it yourself or call a professional. And, if you hire an unskilled repairperson, the problems will only get worse and more expensive to fix.
If you are planning to have kids, (or more kids,) you’ll need more space. It might just make sense to rent for a while as you raise kids. That makes a lot more sense than buying a home that you might need to sell later on for more space. Having and raising a family is expensive enough without having to deal with those issues.
If you are planning to move within two or three years, why burden yourself with the hassle of selling a home you just bought? Selling a home is not an overnight process. And, it can be expensive. You will have to beautify, repair and makeover the home as much as possible to impress potential buyers. Also, you may lose money if the house sells below market value or under whatever you originally paid for it. Rent a home until you are committed to staying put somewhere long-term.
There’s No Shame in Renting
Renting a home is not a betrayal of the American dream or anything to be ashamed of as a person. It might just be the most practical thing to do until you are ready for home ownership. Be honest with yourself and consider the pros and cons of renting against owning. There are already too many people losing their homes because they were not ready for the responsibilities.
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business