Renting a home vs buying a home is an old debate but becoming more relevant every passing day due to rising consciousness about opportunity cost. It is a common perception that people want to go for buying option as everyone wants a dream home. Even nomads and hippies who pass all their lives wandering here and there also wish to finally settle at one point or other in their life
Why Renting a Home is Becoming Trend
Surprisingly, people are preferring renting a home rather than buying one for many reasons, like rising opportunity cost of owning a home.
Further, what can be a better alternative, varies from person to person. The most common things that should impact the preferences include economic factors, personal desire, income, place where someone wants to buy or rent a home and job conditions etc.
But the more compelling factors are interest rates, monthly mortgage payment, down payments, and house rent. Let’s have a look at how these factors make renting a home more lucrative option than buying one.
Benefits of Renting a Home
What describes best the benefits of buying a home, are the cons of buying a home. First of all you have to arrange for a lump sum of down payment. Secondly, you have to pay a huge portion of your income or savings in monthly mortgage for your home.
While, down payments and monthly mortgage payments are two distinct expenses that every one buys a home has to pay there are many other expenditures. The owners have to pay property tax. They have to take care for maintenance and upkeep of the home. Further, they also need to buy flood insurance etc. according to the laws of a specific state.
So buying a home doesn’t mean to simply pay for a home. It comes with a lot of other costs and not everyone can afford it.
Briefly, consumers need to keep in mind all the basic factors before buying a home and if they think that opportunity cost for this is too much they should go for renting a home.
Pros of Renting a Home
Now, the basic pro of renting a home is that there are rent payments and no mortgage payments. Further, one doesn’t have huge savings tied up in down payment. In fact, a portion of money is always free for making investment. So, the funds one will pay for buying a home can be used in investing in a business and earning more.
It Helps Save Money
While, this benefit of renting a home might be quite partial to some users, it is indeed substantial. If you have a home then you are more likely to throw away your money on buying some decoration pieces and other such items.
But, if you rent a room or rent an apartment or even if you rent a home you have no incentive to spend on its interior as it is not your own. You may purchase some furniture of some stuff for making bedroom, or drawing room look nice but you will not make any long run investment on it, saving up some money that you would be able to invest in some more beneficial endeavor.
Should You Always Go For It?
Well, whether to rent a home or buy one usually depends upon a person’s goal and income. But, renting a home is beneficial in a short run and not always in a long run.