Conventional wisdom has always said that owning a home is better than renting. Why pay rent when you could be building equity in your own home? Sometimes, unfortunately, it’s not always as easy as that. There are good reasons why it might be better to hold off on buying a home. Reasons could range from financial to professional to personal. For some, it’s just a waiting period before purchasing a home. For others, renting is simply the more sensible choice overall.
HOME-OWNERSHIP Has Its Challenges. Are You Ready?
Talk with anyone about the first home they owned, and most will say something like, “If I knew how much work goes into owning a house, I might still be renting!”
That may seem a bit extreme, but the truth is that owning a home means being responsible for repairs and upkeep. There’s no landlord to call if the plumbing fails. No one is coming to mow your lawn or shovel your walk. Not unless you’ve arranged for it or are doing it yourself.
On top of paying a mortgage and arranging for utilities, you’ll have to decide if you’re willing to take on the rest of the responsibilities of owning a home. You might decide that life is too short and you’d prefer to rent. Leave the headaches to someone else.
Renting Allows You More Flexibility
Does your job require travel? Are you subject to being moved from one part of the country to another every couple of years? Have you lost job opportunities because you couldn’t easily pull up stakes and move?
It’s cases like these that may make renting more of an asset to you, professionally. Leases generally renew every year or two, and breaking one is negotiable. Selling a house because of a move can be time-consuming, exhausting, and not always the best value for you financially. If your career hinges upon a bit of flexibility, renting may be your better choice.
You Need Time To Build Better Credit
You can’t even think about buying a home without having good credit. Following the real estate upheavals in 2007 and the current economic climate, banks have adopted tighter controls on loan application requirements. Many of the younger potential home buyers are struggling with college debt and an under performing economy. Good credit is a challenge.
It makes sense that many are renting while building a credit history sufficient to be considered for a homeowner’s loan. Having a solid record of paying rent on time helps bolster credit scores considerably.
Oh Yeah. You Need a Down payment, Don’t You?
Should you be determined to buy rather than rent, you must consider how much your down payment will be. Depending on what kind of mortgage you want, your down payment may be more than you’re ready to for. You generally want to be able to put down at least 20% for your mortgage. Anything less could mean requiring mortgage insurance, which will add to your monthly payments. Of course, the more you pay down at the beginning, the less you pay for later.
The trick is that some parts of the country are more expensive than others. Saving up to provide a 20% down payment for a home in San Francisco or New York City will be a challenge for many beginning home purchasers. Renting for a bit longer gives you time to build your savings.
Waiting Until the Time Is Right or
While owning a home is considered an expected goal for most people, it’s not necessarily the best decision for everyone. Some should wait and gather more resources. Some should ask themselves if they can commit to owning a home.
Whether in the short or long run, sometimes renting is the better choice.
This post is sponsored by Varela Westshore, a luxury apartment community located in one of Tampa, Florida’s most desired neighborhoods.