Five Common Reasons Why Renting Is Better than Buying
1/ Your finances are fragile
If you haven't been regularly employed in the past two or three years, have a history of paying bills late, long-term debt (like car payments and other loans), lack of savings for a down payment, and live paycheck to paycheck, chances are you're better off renting rather than owning. Renting provides an opportunity to control housing expenses (you pay the rent, but the landlord handles costly maintenance and repairs) and lets you build your savings and credit profile. Got a below-average credit score? Consider this: Landlords may ask you for extra deposit due to your score, but they can't charge higher rent because of it. Mortgage lenders, however, can charge you higher interest rates on your monthly home payments due to your low score.
2/ Your life circumstances are in flux
If you're not sure you can stay in one place for more than four years — a minimum time recommended by some to break even on the purchase and sale of a home — then renting may make more economic sense than owning. On the personal front, if you suspect your work might ask you to relocate or you're seeking a new job, the flexibility of a lease may be preferable to owning and having to sell (or rent out) your property from afar. If your financial circumstances are secure but big changes are on the horizon (divorce, graduate school, having a child, sending a child to college), renting can provide predictable and lower housing costs than owning over the short-term, until your new financial scenario is clearer.
3/ The rental market is good
In many markets around the country, rental prices have dropped. In some cases, builders are converting new construction that failed to sell or apartments slated for condo conversions back into rental properties, making premium rentals available. Also, some landlords will offer concessions—free utilities or parking, a months free rent on a one-year lease—in an effort to secure long-term rental contracts. All of this favors renters.
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