Renting now can make things become a bit easier later. Saving money is what every American wants to do. Buying a home can not only hurt someone financially but it can put them in a bind that can have them paying a bill for the rest of their life. The economy is on a rollercoaster right now so making the decision to buy a home can be a tad bit tricky. Buying a home is not a one time transaction because once you have the home you continue to pay bills such as mortgage fees and cosmetics.
Thinking about the money that you may have to come out of is a good enough reason on why you would want to save up money to take care of some of the fees that will occur when making the decision to buy a home. If you own your home, you can claim your property taxes on your tax return. You can also get a tax credit if you make certain renovations to your home to make it more energy efficient – like energy efficient appliances and windows. This one is pretty minor, but assuming you have a fixed rate mortgage, your payment should stay the same.
This provides a nice protection against inflation. Renters on the other hand, will watch their monthly payments rise as inflation rises. One of the things my boyfriend and I are most excited about is the ability to customize our house. Apartment living is full of rules and restrictions of what you can and can’t do. I am excited to have the freedom to paint the walls, landscape, and install a new faucet – if I would like. Renting can put some of these things in someone else’s hands to where you can save the money that is extra from your monthly payment.
Renters don’t have to pay for anything that breaks down in their apt. Homeowners have to pay for repairs themselves. When renting an apartment you will never have to worry about fixing the toilet, sink, or plumbing because all of those things are paid by the landlord. Skipping these fees leaves more money in your piggy bank expanding your options for your home when you come to that decision. Making the decision to rent now and buy later can also give you enough time to wait on the economy to get stronger which can make buying a home a much smoother process.
Rent now and buy later is the best technique right now. If you are still on the fence about whether to buy or rent, use the rent ratio. The rent ratio is when you take the purchase price of a house and divide it by the yearly cost of renting a home. According to the New York Times article, “the number 20 provides a useful rule of thumb. When you do the math, you discover that a ratio above 20 means you should at least consider renting, especially if you may move again in the next five years or so.
When the ratio is well below 20, the case for buying becomes a lot stronger. Also, make sure to factor in other costs associated with owning a home such as homeowner association fees, property taxes, homeowners insurance, and maintenance costs. Also, know your personal situation. If you’ve got debt up to your eyeballs or you’ve just gone through a big life change such as marriage, a newborn, divorce, or a death in the family, taking on the responsibility of owning a home might not be in your best interest. Which one do you think is the better financial decision? Do you think that there are cases when renting is a better decision than home ownership?
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