Facebook instagram youtube
Ryan Ackerman
(941) 387-1818
Barbara Ackerman
(941) 387-1820

Real Estate News Real Estate News

Are There Situations Where Renting Makes More Sense Than Buying?

Written By: Ashley Sutphin
Monday, July 19, 2021

The traditional advice that youllnbsp; often hear as far as renting versus buying is that its always better to buy a house when you can. Otherwise, as youve probably heard, its like youre throwing money away by giving it to your landlord rather than building equity in your own home.

Of course, this is true. Buying a home can be a smart long-term investment and your main asset.

With that being said, not everyone or every situation is the same. There can be specific scenarios where continuing to rent makes more sense than buying a home.

Do You Have Any Savings?

A lot of times, when you want to buy a house, youll set aside the down payment. Thatll be all you save for though, and then youll have a monthly mortgage payment to cover. This might be all you budget for.

Owning a home is probably going to mean you have to spend more than that, though.

Before youre ready to buy a house, you should ideally have savings that can cover three to six months of all your expenses.

Can You Put 20 Down?

No, you dont automatically have to put 20 down when you buy a house, but you should aim to have at least that much for a down payment. If you cant put 20 down, then you need to plan on paying private mortgage insurance every month.

This, much like renting, means youre throwing money away. No, you arent really but its not a great financial idea to pay for PMI.

Avoid it if you can.

PMI can end up costing around 2 of your total loan amount every year.

Did You Just >

If you just moved to a new city, give yourself some time to get adjusted before you buy a home. Its okay to rent if youve just moved somewhere new. You might figure out you dont like the new area. While youre renting, even if you do think youll stay, it gives you time to feel out the different neighborhoods and learn more before you actually jump into homeownership.

Do You Have a Lot of Debt?

Unfortunately, theres somewhat of a student loan debt crisis in the United States right now, and its affecting peoples ability to buy homes. Before you take on the debt of a home loan, you should have tackled your high-interest debt first. This includes not only student loan debt but also credit card debt.

Youre financially going to be better off paying those things down before you put your money toward a down payment to buy a house.

If you dont prioritize that expensive, high-interest debt, youre going to pay a lot more over time than you needed to.

Are You Sure About Your Career?

If youre just starting out in your career, you frequently change jobs, or youre thinking about changing your career, hold off on buying a house. You dont know what your financial situation will be like, or even if youre going to be living in the same city. You might find a job opportunity elsewhere.

Is it a Sellers Market?

Its a sellers market in much of the country right now. You need to be aware of what the real estate market looks like where you plan to buy. If the home prices are too high and inventory is low, it can end up being a better financial decision for you to hang back and keep renting until things settle down. If you dont, you might buy a home and pay too much for it, meaning youre underwater when you want to sell it.

Yes, owning a home is an important part of overall financial stability, but contrary to popular belief, its not always inherently better to buy compared to continuing to rent.

Copyright© 2021 Realty Times®. All Rights Reserved


Saturday, July 24, 2021

Can You Buy a House Without a ...
If youre wondering whether or not you can buy a house without a real estate agent, the short an...

7 Benefits of Investing in Com...
For the longest time, Commercial Real Estate or CRE investing has been accessible only to more ...

Copyright ©2021 - Realty Times®
All Rights Reserved.

Facebook instagram youtube