Most adults dream of owning their own home. Being a homeowner comes with an air of stability. Plus, it allows you to have a space that is yours to do with as you please, which is enticing. However, there are situations where renting is genuinely the better choice. Here’s a look at five circumstances where it’s better to rent.
1. You Might Want to Move Soon
Buying a home locks you into that property to a degree. While selling may be an option, that can be a time-consuming process. There is no guarantee that you can find a buyer quickly. As a result, if you would need that money to move to another city, state, or country, you’re a bit stuck.
As a renter, you generally have more flexibility. If you might want to explore job opportunities in another area, travel to a new state for fun, or even just find a smaller or larger place, you can usually do that without much hassle. While you might need to contend with your lease agreement, that is often far less cumbersome than trying to sell a house so you can head off on a new adventure.
2. Renting Might be Cheaper and Less Stressful
When you become a homeowner, you are responsible for much more than just the mortgage. You also have to contend with property insurance, real estate taxes, and maintenance costs at the absolute minimum. And failing to handle those expenses can come with some serious consequences.
If you rent instead, you might actually be able to get out cheaper. While landlords often factor in all of the costs associated with the property when determining the monthly rate, you won’t have to worry about having to pay if the refrigerator stops working or the water heater leaks.
Plus, if anything goes wrong with the property, you can just call the landlord. Typically, it is their responsibility to handle things that break, so all you have to do is let them know.
3. Get Better Mortgage Interest Rates
Mortgage interest rates can fluctuate based on the actions of the Federal Reserve. However, even if they are moving up, that doesn’t mean you couldn’t get a better rate down the road than you qualify for today.
If your credit is less than stellar or you have a high debt-to-income ratio, focusing on improving your financial house could be a better choice. By raising your credit score, you could qualify for a rate that’s lower than you’d get today, giving you a chance to save over the entire life of your mortgage.
4. Easier Separation from Spouse or Partner
While no one wants to think that their relationship will end, it can happen. If you both buy a house together, you are giving yourself an asset that will have to be dealt with if you happen to separate or divorce. You could get stuck having to buy your spouse or partner out, have to refinance suddenly, or may even lose the property altogether if neither of you can afford it after.
Even if renting doesn’t save you from potentially having to move, it is usually a much easier situation to deal with than the alternative.
5. Housing Prices Might Not Go Up
Many people view buying a home as an investment. However, the market crash in 2007-2008 showed that prices don’t always go up, and you might be in serious financial trouble if you end up underwater on your mortgage.
If you’re purely considering buying a house as an investment, it’s probably best to pass. Housing markets can be volatile, so it may be better to rent until you actually want to settle down.
Are there any other situations where it’s better to rent than to buy? Share your thoughts in the comments below.
Read More:
- Will Student Loan Debt Keep You from Buying a Home?
- What is the Best Age to Buy a House?
- Buying a House? A Credit Union Mortgage Might Be Best
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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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