Cost Advantages of Renting vs. Buying
When you consider the amount of money that you’ll spend on living expenses each month, it’s easy to see why you’ll want to carefully evaluate whether you should rent or buy. While many people immediately assume that purchasing a large house is a wise investment into the future, the truth is that home ownership doesn’t have quite the advantages that it once did. That being said, renting an apartment isn’t for everyone.
If it’s time to move and find a new place to call home, here are the cost advantages of renting vs. buying that should be kept in mind during the process.
Less Initial Investment
The costs of moving into an apartment versus purchasing a home vary drastically. While moving into a new apartment may cost a few hundred dollars for a down payment or the first month’s rent, a down payment on a new house will cost several thousand dollars. Consider the fact that most people don’t have that type of money on hand and renting often looks to be an easier decision for immediate move in.
Lower Costs Each Month
Not only is renting an apartment typically cheaper upon moving, but it’s also likely to be cheaper over the first few years as well. That’s because home ownership comes with other general fees that are associated with home ownership – such as taxes or homeowners insurance. As someone who is renting, you won’t have to worry about ownership costs and expenses each month.
In addition, rent is typically cheaper than a monthly mortgage payment. That being said, keep in mind that a mortgage often works towards ownership, which is one of the benefits people consider when purchasing a home. And even though you’ll need renters insurance, that also is going to cost less than the coverage you’d need if you owned the property.
As a renter, you may be required to maintain and fix minor issues that occur to your apartment. This typically includes small things like a stain in the carpet or a hole in the wall. On the other hand, you likely aren’t held to the same responsibilities to catastrophic issues with the properties, as this instead falls on the owner. As an owner, keep in mind that you’ll need to budget for everything from minor to major issues, which can be a hefty expense in the latter scenarios.
When tax season comes around, don’t forget that you’ll also have more responsibilities as a homeowner. There are more forms to file and taxes to pay, so it’s important to keep these tax ramifications in mind as you consider the overall expenses of homeownership versus apartment renting.
One of the largest decisions you’ll make in your life has to do with where you live. As you consider your budget and what you can handle, make sure to evaluate the cost advantages of renting versus buying. Not only will it have a substantial impact on your finances this month, but also on the foreseeable future as well.