Reasons It’s Better to Rent vs. Own a Home
The housing market has been in a state of flux ever since the 2009 crash. It makes you think twice before you decide to buy a home. There are pros and cons to both owning and renting, but overall, there seem to be more pros in the renting column. Before you call your realtor, consider the reasons why it’s better to rent than own.
- Less upfront investment: Before you buy a home, you have to have several thousand dollars to put on a down payment. Depending on what type of mortgage plan you choose will determine how much money you need to have when you close on the house.
Not only do you have the down payment to worry about, but there are realtor fees and closing costs. Those are typically a few more thousand dollars. Realtors receive a commission from the overall cost of the home. The more expensive the house, the higher the realtor fee. The one realtor doesn’t pocket all of the money. It is divided between the listing agent, the selling agent, and their agencies.
Closing costs include all of the other things that go into owning a home beyond the physical building. There are inspection costs, appraisal fees, taxes, deed-recording fees, and more. All of those little things add up to be a hefty cost.
When you rent, the most that you need to have upfront is a security deposit, application fee, and the first month’s rent. Overall, it’s significantly less upfront costs when you sign a lease to rent rather than owning a home.
- Renting costs less: According to NerdWallet, homeowners in all 50 states pay 33% to 93% more than their renting counterparts. Those extra costs come from renovation costs, repairs, insurance, damages, etc. Renting from month-to-month is cheaper than owning if you’re not planning on staying in one location for over 5 years.
- Limited Responsibilities: Your landlord or apartment agency is responsible for the upkeep of the building, not you. You don’t have to worry about paying thousands to fix a broken HVAC or replace the roof. That’s all on the owner of the building. The landlord is even responsible for keeping up the grounds. Lawn care alone can be over $2,000/year. As a renter, the most you need to worry about is telling your landlord about an existing issue, and their responsibility is to schedule a contractor to complete the repairs, and the financial responsibility to pay for whatever needs to be replaced.
- No Property Taxes: The average property tax for a single-family home is $3,296/year. The upside of renting is that you don’t have to worry about paying this tax year after year.
- More Mobility/Relocate Easier: The most obvious of all, is the flexibility that renting offers you. You can easily relocate to another apartment or move out of state without worrying about selling your home. When you own a home, you have to keep paying your mortgage payments until it’s sold. Selling isn’t a quick and easy process. First, you have to prep the home to look appealing to buyer. Then, you need to list it, and hope that you get a return on your investment. Renting is the best way to give yourself the freedom to take the new job position, or move to fit your ever-growing family.
Renting is a low maintenance way to have the best living space with a lower overall cost. You don’t have to sweat about repairs, lawn care, or how to sell later on. Renting will allow you the stress-free option to change where you live whenever it fits your life. All in all, owning costs you significantly more from closing costs, mortgages, and taxes. For now, renting is the more cost effective way to live.