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Renting vs Buying: 7 Reasons Why It’s Better to Rent Than To Buy

Renting vs Buying: 7 Reasons Why It’s Better to Rent Than To Buy

As your largest monthly expense, the cost of housing alone can break or break your budget. Some people strongly believe in the American Dream of homeownership while others are completely content to rent forever.

Of course, making the right financial decision for your specific situation is crucial, but, to help you work out the numbers, The NY Times designed a comprehensive calculator which can help you to determine whether it’s actually more cost effective to buy than it is to rent.

As you slide the toggle to answer each of the nearly 20 questions, the calculator spits out a number telling you the breaking point of where it would make smarter financial sense to rent than to buy. But, besides the cost of your rent versus your proposed mortgage per month, there are other reasons why renting can make more sense in the long run. Here are 7 reasons why renting is the way to go:

  1. Renting is non-committal. When it comes to signing a lease, you aren’t locked in for any longer than your agreed upon lease term. With typical leases spanning a one-year period, you’ll have the freedom to rethink your living situation without locking yourself in for the long term. If you want to move closer to a new job, you can pick up and head downtown. If you have a family and suddenly need more space, you can move to the suburbs. If your income increases and you want to splurge, you can rent a penthouse with a view, but if you experience an unexpected financial setback, you can always downsize.
  2. Renters don’t pick up the tab that comes with home ownership. While you may pay slightly more to rent than to buy–depending on where you live–renting comes with no strings attached. If the washer breaks, the water heater explodes, the roof leaks, or the toilet clogs, you call your landlord, and they pony up the cash. Plus, as a tenant, you aren’t (typically) responsible for property taxes, maintenance fees, lawn care, or other costly, unexpected repairs.
  3. Renters don’t have to qualify for massive loans. Having a few thousand dollars of credit card debt hanging over your head can keep you from sleeping soundly at night…do you really want to owe the bank a half a million dollars to purchase a home? As a renter, you’re only responsible for paying your monthly rent during your agreed upon lease term. No more, no less. And, unfortunately, if you have irregular income (such as a tips-based position) or you’re self-employed, the issue of verifying your income may make it very difficult to qualify for a home loan.
  4. Renters enjoy amenities homeowners could never dream of. Want to live in a home in downtown Philadelphia with a rooftop pool, firepit, sundeck, and outdoor lounge with views of the Benjamin Franklin Bridge? Unless you’re a millionaire, forget it. But, as a renter, you can nab a unit in a swanky building for a fraction of the price of homeownership!
  5. Renters don’t have to buck up the big money. When buying a home, most responsible shoppers come up with a pretty sizeable down payment to avoid paying PMI–a monthly fee for those with little to no down payment. Instead of a 20% downpayment (on a $350K house that’s $70k!), renters simply pay a fee upfront which is, in most cases, equal to three month’s rent in the form of first month’s rent, last month’s rent, and a security deposit.
  6. Renters save big on utility costs. When living in an apartment, there’s a good chance that, at least, some of your utilities will be covered by your landlord. In apartment buildings, it isn’t surprising to see wifi, cable, and electric included in the monthly rental price. Plus, in an apartment building, shared walls, ceilings, and floors mean more efficient energy use and lower utility costs.
  7. Renters pay less in insurance fees. While many landlords require renter’s insurance, the cost is minimal as compared to securing a homeowner’s policy. Because your coverage protects more than just the contents of your home, homeowners insurance can cost into the thousands each year while renter’s insurance typically costs a few hundred dollars at most.

 

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