The financial advantages of renting
Have you ever taken the time to assess the financial benefits of renting? Many renters talk about the lifestyle flexibility and mobile convenience that a renter’s lifestyle offers, but there are plenty of advantages that can play right into your pocketbook. Take a look:
Consistency: Rent is rent is rent. Yes, your landlord may raise your rent a little bit when you renew your lease, but other than standard cost of living increase, which should be expected, renting’s associated financial outlay is consistent and predictable. With homeownership, if the water heater goes out you will be paying out of pocket or maxing out a credit card, and some needed home repairs, like a roof, foundation or other major structural problem, will require a capital investment.
It’s all in the amenities: Most apartment complexes these days have amenities like a pool and a gym, which can help with your monthly expenses if you like to swim and workout. You can also reasonably afford niceties like hardwood floors and fancy countertops, items that have a huge price tag when home buying whether you’re planning on doing a reno or paying a higher price for a move-in-ready updated home.
Playing the market: The housing market fluctuates. A fluctuating housing market is somewhat neither here nor there if you’re planning on growing old in a house, but if you might change jobs or start a family you’ll likely end up moving and you won’t always have a choice of waiting until the markets are in your favor. If you have to sell your house for whatever reason in a downturn, you could end up owing more than the house is worth. While the housing market isn’t generally as volatile as the 2008 snafu, many people (even folks with their finances in order) ended up upside down on their mortgages strictly due to the market crash.
Do you take plastic?: While interest rates on a mortgage have been low since the 2008 housing crisis, you still have to have respectable credit to take advantage of rock bottom interest rates. To start, there is a minimum credit score required to even qualify for a mortgage. After that there is a tier of what scores get what rates (and this can fluctuate). If your credit is poor, you definitely want to rent until you clear up your credit score. Interest on a mortgage can add tens and even hundreds of thousands of dollars over the course of 30 years, so when it comes to interest, less is more.