Buying a home is one of the biggest decisions you will make during your lifetime. While there are many advantages to purchasing your own home, it might not be the right decision for you at this time. Your current financial situation may not be compatible with purchasing a home. Or maybe you’re just not ready to settle down in one area for several years. This is where renting could be more desirable than purchasing a home at this time and why you should consider these benefits of renting a home.
Financial Benefits of Renting vs. Buying
If you are in the beginning of your career, you might not have enough money saved for a down payment to purchase a home. Your initial investment for renting a home is likely to be a security deposit and first and possible last months’ rent.
Renting a home usually costs less than buying a home. The amount you agree to pay each month when you sign your lease makes it easy to set a budget. When setting a budget, you can factor in saving money towards a down payment for purchasing a home in the future.
It costs less to insure your home when you rent. You are only required to insure the contents of your rental. When you purchase a home, you need to insure the entire structure. And if you do not pay at least a 20 percent down payment when buying a home, you are required to also purchase private mortgage insurance (PMI). This insurance could cost you between 0.3 to 1.5 percent of your original loan amount each year.
Flexibility of Renting Over Buying
If you are in a career where you could be transferred to other locales, renting a home has its benefits. Leases are usually for 12 months, which gives you more mobility and flexibility if you are transferred or want to live in another location.
As a renter, your landlord is responsible for almost all repairs and maintenance that may be needed for your rental home. This frees up your time and costs associated with maintaining your own home.
Buying a home is not for everyone. If you are not ready to purchase a home, you could reap the benefits of renting a home.