Is Renting Really a Waste of Money? 3 Things to Consider
The is renting really a waste of money? discussion may never see an end simply because renting is the best option for individuals in some circumstances. By the same token, renting puts money in someone else’s pocket instead of equity in your own. Here we take a look at three pros and cons of renting over homeownership.
Short-Term Lease
Owning a home means committing to repaying the mortgage for at least ten years. Renting, on the other hand, means committing to renting the unit one year at a time. If you decide it’s time to move to a new location or you’re faced with job relocation, it’s far less complicated to execute the move.Â
Low Barrier of Entry
To become a homeowner, you must go through an extensive application process. Income is verified, a deposit is expected, and you’re going to commit to repaying a 15- or 30-year mortgage. The barriers of entry to rent a unit are far fewer.
A property manager is going to run a background check, but it’s far simpler. Property managers are seeking tenants who are going to fit into the existing culture. They also want to ensure that the tenant will pay their rent on time every month. The process is still easier and takes less time to complete.
Circumstances
Renting over homeownership makes sense when it’s time to downgrade. Families purchase a home when their family begins to expand. The flipside is downgrading when the family begins to contract. In this case, renting saves money especially if the utilities are included in the rent. Even then, you may simply need to refinance home loan to make it cheaper instead of becoming a renter.
Is Renting Really a Waste of Money Conclusion
In the long run, renting is a waste of money. Over a 10, 20, and 30 year period of renting, you could have been in your own home paying off your mortgage. In the short run, renting makes more sense. There’s a very low barrier of entry and leases are only a year long at a time. The best way to approach the is renting really a waste of money discussion is to find a midpoint. Consider saving money while you’re renting so you can become a homeowner.