why you should rent instead of buy
Whether you re relocating to a new city or moving out on your own for the first time, you ll be faced with a lot of important choices. One of those choices will be renting a home or apartment versus buying a home. There are disadvantages and advantages to both, but below we ll explore five important reasons you should rent instead of buy. If you do decide that renting is your best route, make sure to check out the top-rated
services at TopTenREVIEWS. Less Responsibility When you rent a home or apartment, most of the responsibility is on the owner s shoulders. This means that if a pipe bursts and damages the sheetrock inside the home, you re not likely to have to pay to replace it. However, if you own a house and the same thing happens, the repair bills will come right out of your pocket. Usually, when you rent a house, you re responsible for minor maintenance such as changing the filters in the AC unit and replacing light bulbs. However, once you ve purchased a house, everything falls on you. No Debt When you re renting a house, you are responsible for the monthly rent and utilities; that s it. On the other hand, when you purchase a home, you re more than likely going to take out a loan to finance it. This will put you in debt a few hundred thousand dollars and possibly delay future plans. Purchasing other things on credit can be pretty difficult, at least until you ve made many payments on the house and have made them on time. More Freedom When you rent a house or apartment, you ll likely sign a six-month or one-year lease.
This means that you re tied to that place for at least that amount of time. Once the time is up, you can move to another location if you choose, or you can renew your lease, provided the landlord agrees. However, when you purchase a home, you are tied to that house for the term of your loan, which is often 20 to 30 years. That is, of course, unless you have the money to purchase a home outright, which most people don t. You may also sell the home, but you are subject to the whims of the housing market. No Financing Most individuals who purchase a home need to obtain some type of financing, which usually comes in the form of a loan. There is a long, drawn-out process involved in getting a loan and this sometimes includes exorbitant interest rates. When you rent a home, you don t have to worry about financing. Short-Term Housing Needs Renting is best for short-term housing needs, such as those who are attending college or individuals who are in or plan on going in the military. Renting allows you to move easily when you plan on relocating. However, if you purchase a home, you will have to go through the process of selling it or at least maintaining it, which can be frustrating. As you can see, there are many reasons why renting is better than purchasing. It s important to determine precisely what you need from a home before deciding whether you should rent instead of buy. Analyze the reasons above to determine whether renting or buying is best for you. At TopTenREVIEWS We Do the Research So You Don t Have To.
If owning your own home seems out of reach, you are not alone. New data shows Generation Y - those younger than 28 - are spending their earnings on travel and shopping instead of saving for a house deposit. Read more: в в Owning your own home is the "Kiwi dream," but renting may be a better option. Here are 10 reasons why renting is better than buying. 1. Property may not be the best investment Yes, houses usually appreciate. But so do other assets and investments. If you compare the value of a house now, to what it was bought for 20 years ago, it may seem impressive. But other investments - such as investing in a business - could have also appreciated because of inflation. 2. You don't need to sweat the economy Renters will have far less to worry about than homeowners if the real estate market does crash. Those who bought property to fund their retirement, for example, will be very worried whereas you will just keep paying rent as you always have. 3. There's all that interest Well, if you can afford a house without a mortgage that's great for you. But most of us can't, and many of us are opting for 25 - 30 year loans. That's a shedload of interest. For example, if you opted for a $500,000 home and borrowed 80 per cent, you would end up paying $862,938 ($462,938 in interest alone) over 30 years, based on an interest rate of 6 per cent. (According to 4. Freedom Purchasing a house is a much bigger commitment than signing a 6 month or 1 year lease. Once your lease is up, you can choose to move or stay (if the landlord agrees).
If you've bought, and decide to move, you are subject to the housing market. 5. Home loans are tempting Just because you're approved for a big mortgage, doesn't mean you should spend everything the bank is willing to give you. Though many end up borrowing more than what they can actually afford. 6. Live where you want Renting gives you the flexibility to live in the area you want. Many people like living in urban areas, close to amenities for work and socialising, but purchasing in these areas may be unaffordable. 7. Stay liquid For example, if you have just graduated as a pharmacist and are thinking of launching a business, you will need your cash for that - not tied into a property. 8. Maintenance and upkeep I remember when my husband and I rented our first flat and the oven packed up. One call to the landlord, and we got a brand new one without any hassle. The same cannot be said now that we own a house. 9. Borrowing may be more difficult Having a mortgage can increase your debt-to-income ratio, which may make it more difficult to borrow for something else. Even if you pay more in rent than you would to pay off a mortgage, on paper rent is an expense, not a debt. 10. Increase your deposit There's the old adage that renting means you're paying off someone else's house instead of your own. However, renting may be a lot cheaper than paying off a mortgage. Those savings could be put away to increase your deposit and decrease your loan amount when you do buy a property.
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