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Advantages of renting a house instead of buying it

 

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Are you debating whether to buy a house or keep renting? There are advantagse to buying which are heavily advertised by all the businesses benefitting from your purchase (banks, other home owners, home sellers, real estate agents, even contractors who benefit from the necessary repairs that the seller will have to do in order to sell the place..) but there are just as many advantages to renting - which besides your landlord nobody has a vested interest in publishing.

Here are the advantages of renting:

  • when you buy, in the beginning your monthly payment may be higher than comparable rent. Keep in mind that a buyer (owner, debtor) has to pay interest, (usually) principal, property tax, fire insurance and possibly HOA (home owners association) fees. Example for the town I live in:
    $600k home, 20% down payment. Leaves a 80% = $480k loan at 6% with 30 year amortization, the monthly payment may be $2400 (interest), $400 principal, $200 HOA fee, $90 insurance - total is $3090.
    To rent the same place would be only $2000.
    Of course in 10 years, it would look different. Insurance and HOA fee may have doubled then, total payment is then around $3600. Rent may have doubled also - $4000. Advantage for the home owner by that time.
  • There is a risk of home values falling, at least 'temporarily'. Temporarily means for up to '10 years' which is a pretty long term in most people's book. Ideally you buy a place, live there for 20 years and don't bother tracking neighborhood sales. This brings us to the next issue:
  • 'flexibility'. If you are young and your situation is about to change within the next 5-10 years, then buying a home may be the wrong choice. Such changes would include 'getting married', 'having (another) child', 'moving for job reasons'.
  • If you rent, you can keep your savings which you'd use for the down payment. On a 600k home the down payment would normally be 20% = $120k. Quite a lot of money! It could be invested in stocks, money market accounts, CD accounts etc etc.
  • If the home prices are so high that you cannot afford a 30 year term fixed mortgage and instead have to choose an adjustable rate, then you are betting on various things.. that the home will keep its value and you will be able to refinance once the initial fixed term is over or that interest rates will not go up too much. By renting you don't have to sign these risky loans.
  • No worries about repairs - when the heater breaks, just call your landlord.



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Comments:

2008-08-25, 21:12:20   (updated: 2008-08-25, 21:13:50)
sʆh  
rating
this helped me very much

cheers
2008-12-08, 14:37:05
anonymous from United States  
hey
2009-02-08, 00:41:12
anonymous from Tustin, United States  
This is helpful for me as well because my family plan to relocate to texas next year and we'd like to know the difference in renting vs buying. We rent know so we are aware of the benefits of apartment living but texas has quite a few options to rent homes. With the way the economy is, I am afraid we aren't in the position to take a risk such as home owning. Thanks again for writing this.
2010-01-14, 23:27:52
anonymous from United States  
I'm trying to cite this website, can anyone tell me who the author of this site is?
2010-01-22, 01:11:50   (updated: 2010-01-22, 01:12:40)
HaitherD  
I agree that buying a home is much better than renting. It may cost to much because you have to pay for inspections, appraisals, repairs and property taxes but if your a tenant, guess how much property taxes you need to pay? ZERO. Aside from that, you also have the satisfaction of knowing there's no impact if the housing market tanks, as long as you have a stable landlord.



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2010-03-01, 13:38:10
anonymous from United States  
rating
u didnt havta put your ugly ass picture up there llfx
2010-03-01, 13:38:10
anonymous from United States  
rating
u didnt havta put your ugly ass picture up there llfx
2010-03-01, 13:38:19
anonymous from United States  
rating
u didnt havta put your ugly ass picture up there llfx
2010-03-01, 13:38:20
anonymous from United States  
rating
u didnt havta put your ugly ass picture up there llfx
2010-04-07, 10:09:34
anonymous  
Thank you very much for this!


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2012-03-01, 08:21:20
anonymous from United Kingdom  
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2012-03-01, 08:22:56   (updated: 2012-03-01, 08:24:45)
anonymous from United Kingdom  
i look like thins when i eat cheese i look constipated and ma shit is yellow
2013-04-19, 01:37:25
anonymous from Hong Kong  
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