For years we have heard that the single most important investment for people is the ownership of their own home. The advantages are obvious - the equity you put into a home is like money in the bank, and it belongs to you. Are their real advantages to renting versus home ownership? This article will cover the advantages and disadvantages of renting.
For couples just starting out, renting is the obvious choice. Although the price of rent varies from locale to locale, there is always an affordable unit to rent. Newly married couples most often both hold jobs, so paying rent is not an obstacle for them. They are able to maintain the lifestyle they choose without the hassle of home maintenance, often have access to lawn and garden services and luxury amenities, and don't need to be concerned about coming up with the cash if an appliance fails or something needs fixing. Apartments and lofts are located conveniently for such things as shopping and job access.
Renting is also a good choice for the young single professional. These professional are almost always more involved in career success, and to them, renting is the best choice.
What are the advantages of renting? Here is a list of them:
* There is a low initial investment. Generally, the first and last month's rent is used as the security deposit.
* Renting is less costly than home ownership. There is no large down payment to be paid up front.
* Less responsibility. The landlord will take care of repairs and lawn maintenance.
* People who rent are not affected by fluctuating property values. The law regulates how often rent can be raised.
* Because renting often includes the cost of utilities, renters can more easily budget their monthly income.
* Lower insurance costs. Renter's insurance is always lower than the cost of insuring your own home.
* It costs less to move into an apartment. No down payment is anticipated, and fewer deposits required.
* Most leases are very short term. If the renter is not satisfied with the apartment, they can move to a better place at the end of the lease.
There are of course many other advantages to renting. Many young professionals and persons working for large corporations are often subjected to having to move quickly. Promotions in a large corporation might mean that you need to relocate in a hurry. The hassle and expense of selling a home can be a real hindrance to persons in the position. The current housing situation is not good for the seller and having to make payments or deal with selling a home that may be on the other coast is a hassle that most career oriented people do not wish to endure. No married couple wishes to move to a new location, leaving their spouse behind to tie up the sale of a home.
Another big consideration is that your current job may be in jeopardy. Layoffs and downsizing are common today. If you lose your job, and are having a difficult time finding another, you are faced oft times with a large house payment that you just cannot make. Currently, foreclosures on home are at an all time high. Unemployment compensation will rarely cover the monthly mortgage payment.
You must also consider maintenance. Experts agree that people owning homes should be banking 5% of their income to maintain the home. Couples just starting out, or people who are financially stressed, are not able to put aside this amount. Many people do not have the expertise to maintain a home, nor have the desire to do so. In a renting situation, the landlord shoulders this expense and takes care of the property.
Another very real consideration for renting is your own personal credit score. Finance companies are very concerned lately about foreclosures and the people who are applying for loans. The housing market is in very serious trouble at present, with people dropping the selling price of their homes to get rid of them. Banking institutions are very concerned about this, and are hesitant to lending money to people that do not have credit scores that are squeaky clean. If your credit score is not up to snuff, renting is the best alternative for you until you can get your credit score up to acceptable levels.
Although renting has advantages, there is always a down side. As in everything you attempt to do, knowing the facts and making sound decisions as to home ownership will go a long way in helping you to decide. Renting is not an option for many people, and this holds true concerning home ownership. Renting is the way to go if you can relate to the considerations outlined in this article.
. Questions of a Do It Yourself nature should be submitted to our "