You’ve been trained to think that home ownership is the ultimate goal.
You’re trained to think you are a responsible adult when you own a home.
The “experts” always said that buying a home is the best investment you can make.
Realistically, that isn’t always the case.
There are drawbacks to owning a home.
Sometimes the smart and reasonable choice is NOT to own a home.
There could be a variety of reasons to rent.
The decision whether you should own a home or rent should be weighed carefully.
You need to consider your short-term, as well as the long-term needs.
And those needs need to be your own, not someone else’s.
Would you save money renting?
In some markets, owning a home is cheaper than renting.
Sometime the opposite is true.
Use a home loan calculator to estimate how much your monthly payments will be.
Many people stop here, but there are many other costs of home ownership you must factor in.
You will also need to pay property tax, home insurance, and home repairs, not to mention having a sizeable down payment available.
When you factor in all of the expenses, you may see that renting will save you quite a bit of money every month.
Long-term financial goals
While home values can appreciate, that is not always a given.
If you rent, you can use the cost savings for a number of other purposes.
Fully funding a Roth IRA.
Increasing your 401(k) contributions.
Investing in yourself by starting a business.
Taking a longer-term approach can help you make the right choice.
Would you stay in a house for five years?
Many experts recommend you do not buy a home if you will not stay there for five years or more.
After realtor’s fees and closing costs as well as the home loan interest you pay at the front of the mortgage, getting ahead financially when owning a home for such a limited time is difficult.
For people who may be planning on starting a family, it pays to have the freedom to upgrade (in size) with little notice.
Upwardly mobile folks will also be able to take advantage of their situation by not being tied to a long-term mortgage.
Losing income is never an easy event to accept.
Considering the security of your job when choosing living arrangements makes sense.
If you do lose your job as a renter, the situation may be easier to deal with.
You don’t have a mortgage hanging over your head.
A large tax bill or costly repairs aren’t things you have to deal with.
Once your lease is up, you can walk away.
You may even be able to transfer the lease if the circumstances are right.
If you travel frequently, renting may make more sense.
You don’t need to worry about home upkeep when you are gone.
Short-term leases make it easier for those who only stay put for a few months at a time.
There are even fully-furnished short-term housing options aim specifically at travelling business people.
Some people will say if you are renting, you are just throwing away your money for nothing tangible in return.
However, keep in mind that if you are a renter, you save yourself many expenses including paying property taxes and paying for repairs and home maintenance.
You also free up your money for other purposes that may be more of a priority.
Finally, you are free to move with little advanced notice which can be a benefit in the case of job loss or lifestyle changes such as marriage or the birth of a child.
If you like a change of pace – or your lifestyle demands it – you can even try renting from companies that manage multiple communities, where there is usually lease leniency if you move and stay with one of their properties.
Don’t believe those who tell you home ownership is the only way to go.
There is a definite case for renting.
You just need to decide what is best for you and be willing to reevaluate your decision every few years.
In time, you may find that owning a home makes the most financial sense.
Until then, renting can be a great way to keep your options open without committing a large portion of your money or time.
Just remember, you need to do what is right for you, not what anyone else says you “should be” doing.