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Why it's Better to Rent Than Buy a Home Part 1

It is probably every person's dream to own a home of his own – his dream house. Apparently, having your own home frees you from responsibilities and potential problems that many tenants face month in and month out. However, more people still pay rent just to have a roof over their heads, and when you ask them why, they'll say it's the best option for them. Is it, though?

Well, renting and buying a home have their advantages, more so with the financial aspect. In this article and the next are 10 reasons why renters have it better financially than people who buy their own homes. This list originally appeared on Investopedia on March 15, 2017, but the content should be helpful if you're weighing the pros and cons of buying or renting a home. 

REASONS RENTING IS BETTER THAN BUYING PART 1

No Maintenance Costs or Repair Bills

A definite advantage renters have over homeowners is that they have no maintenance costs or repair bills to pay off. When you rent a property, your landlord is responsible for all maintenance and repair costs. If an appliance stops working or your roof starts to leak, you do not have any financial responsibility to have these things fixed. Homeowners, on the other hand, are responsible for all of their own repair, maintenance and renovation costs. Depending on what the repair is, these costs can be quite extensive.

Access to Amenities

Another financial benefit to renting over buying a house of your own is having access to amenities that would otherwise be an enormous expense. Luxuries such as an in-ground pool or a fitness center come standard at midscale to upscale apartment complexes with no additional charge to tenants. If a homeowner wants to match these amenities, he or she can expect to pay thousands of dollars in installation and maintenance costs. Similarly, condo-owners need to pay monthly fees to pay for access to these amenities.

No Real Estate Taxes

An obvious benefit that renters have over homeowners is that they do not have to pay real estate taxes. Real estate taxes can be a hefty burden for homeowners and vary by county. Although property tax calculations can be complex, they are determined based on the estimated property value of your house. With houses getting larger and larger, property taxes can be a significant financial burden.

No Big Down Payment

Another area where renters have the better financial deal is upon signing. When purchasing a house with a mortgage, you're required to have a sizable down payment, ideally 20%.

However, you do not have to have a huge down payment saved up to move into a rental property. While the exact amount you need to move in varies from case to case, the total amount is significantly less than you would need to buy a house.

According to a graph released by the New York Times, many landlords require a rental deposit equal to the amount of one month's rent while a down payment for a house is much higher. For example, with a 5% deposit on a house that has a market value of $175,000 your move-in costs start at $8,750, which is much more than the average one-month rent rate. Also, those buying will want to save up much more than 5% for their initial down payment because the bigger the down payment, the better. In short, bigger down payments can save you thousands of dollars in interest.

Shaky Market Creating More Renters

While many experts claim the U.S. Housing market is making a full recovery, others aren't so sure. An article written by International Business Times claims that the market is just now stabilizing and the word 'recovery' is unwarranted. As foreclosures continue, many citizens are scared off of buying altogether. By renting, citizens are avoiding potentially owing a mortgage that is more than the house's worth.

Please stay tuned for the second part of this article.

Why it's Better to Rent Than Buy a Home Part 2
No-Fuss Design Makes for Classy Home Styling

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Friday, 20 April 2018

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