Is your credit score taking a toll due to your debt and mortgage payments? You may want to consider selling your home and start renting. You might ask what the benefits of renting over owning a home are, keep reading to find out more. While both renting and buying have their financial advantages, owning a home isn’t right for everyone. In this post, we will explore a few reasons why renting can make more economic sense than owning a home.
An advantage of renting a home is that there are no maintenance costs of repair bills. When renting a property, the landlord is responsible for all the maintenance and repairs. For example, if the roof starts to leak, or a toilet isn’t working, your landlord is typically expected to cover the costs and get the replacement or repairs done for the tenant. On the other hand, a homeowner would be responsible for all their home repairs, maintenance, and renovation costs. Depending on the nature of the repair, it can be quite costly.
Another benefit of renting a property rather than owning it is not having to pay any property taxes; property taxes add a good chunk to homeowners’ expenses – the costs can be thousands of dollars a year. The exact costs of property taxes depend on the size, property value, and additional details of the home. However, with newly built, larger homes, the cost of property taxes can be rather high.
By renting a house, tenants have the ability and flexibility to move at the end of their rental term. Flexibility to downsize is especially crucial to those who may find their budgets fluctuating. For instance, if you lose your job and are struggling to make ends meet, you can find a smaller place suited to your financial situation and budgets. Having the flexibility to relocate is another benefit for those renting, the process of breaking a lease is a lot faster and easier than selling a house. If you own a home and want to move, it is a lot more complicated, especially with a mortgage. Selling a house can take a lot longer than one would like, and if you choose or have to move before it sells, you will still be obligated to make the monthly mortgage payments and any additional costs. If you aren’t ready to commit to living in one place for longer than five years, renting lets you stay as long (or as briefly) as possible.
Aside from providing a security deposit, usually the first and last month of rent, you are not expected to provide a substantial down payment or finance the costs required to get a mortgage. In general, when purchasing a home on a mortgage, you are required to have a generous down payment, which is typically close to 20%, but vary from case to case. If you do not have 20% for a down payment, you may be expected to pay additional costs, such as mortgage insurance, which adds to your expenses. Not having to provide such a substantial upfront amount can be a financial relief for many people.
While renting may not always be as cheap as one could want, not having a mortgage means you won’t be expected to pay a significant amount every month. With a mortgage, you will be expected to pay for additional expenses like property tax, mortgage insurance, homeowner’s hazard insurance, flooding insurance, and condominium fees. As well, Interest rates can vary depending on your mortgage type and may even make your payments higher than before due to market changes. Rental prices, especially for smaller properties, are often much less than a mortgage payment. Renting can save you hundreds or even thousands of dollars each year.
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