While many people view renting as a stepping stone to buying a home, renting actually carries a number of benefits that can make it a much better choice than buying.
Lower Monthly Cost
Renting often carries a lower monthly cost than owning a home. When you add up your mortgage, property taxes and insurance, rentals are usually cheaper, especially compared to a low-down payment mortgage that carries private mortgage insurance. Even after rents climbed while interest rates and home prices fell, renting was still less expensive in most of the largest cities in the country if you planned to spend fewer than 10 years in your home.
Lower Ownership Expenses
Renting does more than lower your monthly mortgage cost, though. It also saves you money in other ways. Houses typically cost more to heat and cool, and they have lawns that you either need to mow or pay someone else to mow. Landlords have to pay to fix a leaky roof and swap out faulty appliances. But, as a homeowner, those same repairs come out of your pocket. These additional costs frequently add up to hundreds of dollars a year.
Conserve Your Down Payment
Purchasing a home after the housing bust of 2007 typically requires a 20 percent down payment. With such a large sum of cash sitting in your savings, you may wonder what else you could do with that money. Homes typically are not good investments, appreciating at or slightly ahead of the rate of inflation. If you took that down-payment amount and invested it, you could end up much wealthier over time.
What happens if you get a great job offer 500 miles away and you own a home? Or if you find out that you are pregnant with twins and live in a one-bedroom condo that you bought? With rental housing, you can move when your lease expires. With job opportunities scarce, the ability to relocate can be a blessing. And if changes in your personal life warrant a larger or smaller home, renting makes it easier to move to a place that fits your needs.