A lot of people think about the question of whether they should rent or buy. And a lot of answers are offered that frame the question as if it’s about investment first and foremost. But the truth is that if it’s your primary residence, you should be considering much more than the factor of buying a home to sell later on. Here, we’re going to take a much closer look at the question of renting a home and why it may be more worth it than many readers believe.
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Is it more financially beneficial to rent or buy property? It’s a conundrum everyone faces at some point in their life. At one point or another, you’ll look at the cost of your rent and wonder if it’s worth it. We can solve this problem by answering a few simple questions.
How Much Money Do You have Saved?
It takes a lot more money than you probably think to buy a piece of property. Many people believe you’ll have enough money to buy a home when you have five percent of the asking price. Therefore, if you are buying a home that is worth one hundred thousand, you only need five thousand saved, right? Wrong because that’s the bare minimum you’ll need. To get a good mortgage repayment deal, you should be aiming to pay around twenty-five percent of the asking price upfront. That way, you’ll be able to access frozen or smaller interest rates on your mortgage. But the costs don’t end there. You also need to think about the other costs involved in moving to a home you own. This includes paying for a solicitor, home inspection and a moving team. All that adds up leaving quite a large sum at the end of the day.
Many people are torn between the decision to continue renting or buy a home. While buying does present several benefits since it is an investment, for many people, renting is actually a better option and presents just as many potential benefits. Here are some of the best benefits to renting an apartment rather than taking the plunge and purchasing a home of your own.
Less commitment, more flexibility. Buying a home is a huge commitment. You are committing to staying in a specific location for at least a few years. If you aren’t ready to settle down, want to explore, or if work moves you around frequently, buying is likely not a good option for you. Renting provides you with flexibility to choose 6 month or year long leases. Some apartment complexes will even allow you to rent from month to month if you are uncertain about your living situation or where exactly you will end up. Short Term Rentals in Washington DC are an option if you plan to stay in the area only for a short time, for example.
Fewer unexpected costs for maintenance or repairs. As a renter, your landlord takes care of all maintenance, repairs and issues. You pay for a lot of this upfront when you pay rent each month. So, if your toilet is clogged, the roof is damaged, or a something breaks, you simply tell your landlord and they call the necessary people and pay them to correct the issue. As a homeowner, however, you become your own landlord, essentially! You would have to pay out of pocket for any repairs and call the necessary handy person to come to your home and fix the issue. This means more work for you and less predictability regarding your month to month home maintenance expenses.
If you are debating on whether it is wiser for you to buy a home or to rent, there is a useful online calculator that can help you determine this as it does the number crunching for you. Once you have launched the Is It Better To Buy Or Rent calculator, simply input the figures specific to your situation. This calculator is also useful for folks who already own a home and would like to know how long they should be prepared to own it before it would make financial sense to buy another home, etc. In our case, the calculator suggests that buying is better than renting after 4 years.