There are many pros and cons to be considered related to both renting and buying a home. Few decisions in life are taken more seriously. Typically, a buyer's preferences and circumstances influence this important decision.
While home ownership has long been considered part of the American Dream, many consumers are approaching the question about whether to rent or buy from a more practical standpoint today. The many expenses associated with homeownership can make consumers think twice about whether to take the plunge and buy a home.
It is not surprising that many young adults who would normally be ready to buy their first home based on trends from past decades are now thinking twice about home ownership as they tackle large sums of student debt. There is little doubt that the aftermath of the housing crisis where many homeowners lost their home may also explain why consumers are more carefully considering the risk of taking on such a large debt.
Differences in Owning and Renting a Home
The amount of cash required to buy a new home versus renting a home is one of the most significant considerations consumers must evaluate. A typical mortgage loan requires a buyer to put down 3% or more to get into the home.
The down payment is just the starting point as expenses add up quickly in the average home purchase transaction. Closing costs can also be a huge cash outlay varying wildly between one and eight percent or even more. While sellers sometimes offer to pay closing costs, this is not the case for many buyers. Comparatively, the deposit charged to lease a home is usually much less. It is common for renters to pay first and last month's rent or much less in many situations.
Owning a home means spending the time and money required to maintain it. Eventually, all homes need a fresh coat of paint and a new roof. Other common expenses to expect are flooring upgrades, plumbing repairs and the replacement of an old water heater, to name a few. Comparatively, renters simply contact the owner to make repairs when necessary, paying nothing.
Benefits of Renting a Home
There are many different benefits to choosing to rent a home instead of buying one. Some of the major benefits that people see include:
- A renter can easily predict home expenses each month.
- On average, renters pay less than homeowners on a monthly basis.
- Renters enjoy peace of mind that is much harder for homeowners to achieve as they worry about unexpected home repairs, property taxes, insurance premiums, dead trees or possible pest infestations.
- Renters have more time freedom than homeowners since they aren't responsible for home repairs and maintenance.
- Renters can pack up and move quickly if necessary to meet family obligations, take advantage of new career opportunities or chase a dream that requires relocation.
- Renters don't have to go into debt with a large mortgage.
Tips for Finding a Good Home to Rent
There’s a lot of good homes that can be rented. If you want to find one, it just takes some time and effort. Consider these tips to help find yourself a good apartment:
- Take the necessary time to find the best property by starting your search early rather than later. It is no secret that if you wait until the end of the month to begin looking, many of the best properties will already be snapped up.
- Hire a knowledgeable professional who knows the area and can answer questions. Many real estate companies have a rental division.
- Beware of rental scams. Never give your credit card information over the phone or make a deposit to view a home.
- Offer to lease the home on a long-term lease of 13 or 14 months in a tight rental market. This strategy can give a renter a competitive advantage in a tight rental market.
- Be sure to physically visit neighborhoods and not rely entirely on the Internet to do your research. The last thing a new tenant wants is to be surprised by the neighborhood at the last minute and forced to move into an unacceptable rental property because time has run out.
- Utilize social media as a tool for letting friends and family members know that you are looking for a new rental home. Some of the best rentals are discovered through word of mouth.
- Approach sellers with homes for sale that aren't selling to broaden your search. Sites like Trulia and Zillow provide valuable information such as how long a property has been on the market. Timing is everything. An inpatient seller may decide to rent to you in the interest of paying the mortgage.