Although many people think that buying a house is always the best option, there are several reasons why renting a home would actually be a better choice. This depends on the specific situation and the current state of the real estate market in a certain area. To help you if you are unsure whether to buy or rent, we have listed 3 reasons why it’s better to rent a house.
1: You can cut down your monthly costs
If you are currently unemployed, or new to the job market, your income might be insufficient to be able to finance mortgage costs on an expensive house. To rent a home, you don’t need to make any down payments and a small budget will be more than enough to cover the costs.
There are even some options to get government help in the form of subsidies, which you wouldn’t have if you’re buying.
When renting a home, you can live in more expensive areas than you would be able to afford with the same budget buying a home. A mortgage payment for a house will be much higher, mostly, than the rent costs would be for the same house. You open yourself up to a better accommodation by renting.
2: You have the flexibility to move
If you only want to live in a house for a short period of about 5 years or less, renting is a safer and cheaper choice. The real estate market might very well go downwards in the area you’re living in. This might leave you with a debt after selling the house.
A lot of people prefer to buy a house because they can profit from the price increase of the property. Renting won’t give you the privilege of owning a high value house at the end of the mortgage period. You could, however, compensate for this by investing the money you save on renting. This way you will still have some spending capital after retirement.
3: You pay a set price for every month
If you rent an apartment or house, you won’t have to spend any money on repair costs and property taxes. If you own a house, repair costs could come at an inconvenient time when you are a little low on cash. When renting a house, your costs are more stable and you know what costs to expect every month.
If you want to know if it makes sense for you to buy or rent, there is a convenient rule of thumb that you could apply. You will have to know the buying price of a certain house and then look for the renting price of the same or a similar property.
You take the total buying price and divide it by the yearly renting price to get the rent ratio. The rule of thumb says that a house with a rent ratio over 20 will be more expensive in monthly mortgage costs than renting this same house on a month to month basis.