Owning a home is almost twice as affordable as renting in terms of monthly payments. Both have their own perks, but renters can have better financial deals when the economy is poor. Many people have made a sizable amount of money just by switching from owning to renting.
Check out the reasons why renting is better than buying a home:
The Changed Perspective of Modern People
People belonged to the earlier generations such as Baby Boomers and Generation X used to purchase a home actually to live in it. They took out a 30-year mortgage and lived in that home for the rest of their life, gaining enough equity in the process to make the purchase profitable.
However, modern people don’t spend their whole life in just one home. They move, refinance, and use the home-sale profits on luxury goods, new cars, or vacations. So, renting makes more sense for them, at least financially.
Home Buying is Risky for Low-income People
Buying a home is a gamble where you have to make monthly mortgage installments, paying utility bills and many fees related to homeownership for years to come. It’s a great risk if you don’t have a steady income and handsome savings to sustain a financial hit without downsizing.
So, renting is safer as you don’t have to deal with a volatile market or revised mortgage rates.
Renters Don’t Need to Pay Maintenance or Repair Costs
Renting an apartment means you will only have to pay the rental, utility bills, and service charge (if there’s any). You landlord will have to pay all the maintenance, repair, and renovation costs. For example, if the shower stops working, the faucet drips water, or the roof leaks, the apartment owner is responsible for fixing these things.
Taxes & Insurance Costs
Renters don’t have to pay real estate taxes, which makes renting lucrative than homeownership. The fees vary by county, but it commonly accounts a lump sum of money. Besides, the amount of property taxes increases with upsizing the houses.
Homeowners also need to maintain an insurance policy. While renters can also take an insurance coverage, it’s much cheaper than the one available for the owners.
The Down Payment
The homebuyers have to pay a sizable amount in down payment, which is usually 20%. On the other hand, renters only have to make a deposit equivalent to one month’s rent, which is significantly less than the initial costs of buying a home.
In addition, a bigger down payment means homebuyers have to pay a lower interest rate throughout the mortgage period. So, many people opt for it even if it’s financially stressful.
The main benefit of renting is that it gives your freedom and flexibility in your financial life. You can downsize, upsize, refinance, or whatever you want at the convenient time.