SHOULD I RENT OR BUY A HOUSE?

Should I rent or buy a house?

Should I rent or buy a house?

Abstract

You can usually rent an apartment or house for much less than the monthly cost of buying it. In renting you initially normally have to come up with only the first and last month's rents. You don't have to come up with the thousands of dollars in up-front fees or closing costs, such as inspections, legal fees, land transfer taxes, insurance, etc., as do home buyers.

Be freer to move.

Financing

You will have no huge long-term financial investment and commitment to consider, so when you need or want to leave, you can do so. Renting provides an enormous amount of flexibility, enabling you to decide on a year-by-year basis whether to renew your housing situation. Moving from a house involves enormous planning and costs, such as the thousands of dollars paid in commission to real estate brokers.

There is no waiting to sell, and no agonizing about the housing market at the moment you need to sell. You can't place a price tag on the freedom and mobility available to you to pick up and leave when the need arises. The simple binds of renting are much more preferable to the anchor of home ownership.

The pick-up-and-go freedom of renting will always far outweighs the advantages of putting down roots.

Worry less about property values

If housing values decline, the worst that can happen is that you will pay too much rent, but only until your lease expires. A house needs to appreciate about 10 - 15 percent to cover the initial purchase costs as well as the selling costs. If you move before that appreciation has occurred, you will end up having to absorb those expenses. If you move after a couple of years and your home hasn't appreciated significantly, you may not be able to sell your home for a profit that would cover those costs.

On the other hand, in a good renter's market your monthly rent can procure an exceptional apartment, whereas the same money paid toward a high-interest mortgage would tie you down into a long-term commitment with a lesser value home. If you are lucky enough to have found an apartment that is substantially below market rates, it makes more sense to rent that apartment and invest the savings elsewhere.

Have more money to invest elsewhere

Down payments and mortgage payments make it difficult for most ...