We all know the benefits of buying a house to live in. Not only you can live in it, but also you can rent your house to produce monthly passive income.
Owning a house also has significant tax benefits as well as equity from appreciation. In brief, buying a home can be very rewarding.
However, homeownership isn’t for everyone. You might not be financially ready to own a home. You might not live in the house for too long.
As you’re making the rent vs buy decision, here are some signs you’re better off renting rather than buying a home.
If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.
Check out: 5 Signs You’re Not Ready to Buy a House
1. You don’t have sufficient time and money for home maintenance.
The home buying process itself and being a home owner is time consuming.
You’ll have to do a lot of research, which can take up a lot of your time. Hiring a real estate agent to look for properties can also take up your time.
Investigating which neighborhoods to live in, as does speaking with different mortgage lenders can soak up plenty of hours.
However, some service, like LendingTree, allows you to compare several mortgages at one time without wasting your time speaking with individuals lenders.
As far as being a homeowner, you can hire professionals to deal with home repair issues, but doing so costs money and still requires some of your time.
So, if you don’t have time and has no extra money to hire people, renting might make the most sense.
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2. You can’t deal with the problems associated with owning a home.
When you’re a tenant, you don’t fix anything in your building, except a few minor things in your apartment such as changing the light bulbs.
Even then, you can still call your landlord to fix the light bulbs. I have done it!
But when you’re a homeowner, you are responsible to fix any issues with the home such as a burst pipe, a leaky roof, etc…And like it or not, these problems do occur.
So if you don’t have the money to pay repairs, or if replacing a heating system or a roof causes you distress, renting might be the better option for you.
If you’re not sure whether you’re ready to buy a house, read the following article for more insights:
5 Signs You’re Not Ready To Buy A House
Feeling Overwhelmed With Your Finances?, You have options and there are steps you can take yourself. But if you feel you need a bit more guidance, simply speak with a financial advisor. SmartAsset’s free tool matches you with fiduciary advisors in your area in 5 minutes. If you are ready to meet your goals, get started with Smart Asset today.
3. You don’t have money for a down payment and closing costs.
Buying a house requires a lot of upfront costs. First, mortgage lenders require a down payment somewhere between 3 percent and 20 percent of the property’s purchase price.
On top of that, you will need anywhere between 2 percent and 4 percent of the home’s purchase price for closing costs.
You’ll also need money for inspections, title insurance, broker’s fees, etc.
Whereas, with renting , the upfront costs might include a rental application fee, which can range from $50 to $150 depending on your state.
A security deposit (let’s say $1400) and a first month rent (let’s say $1400). Any rent vs buy calculator you may use will tell you what makes more sense.
So if you cannot afford a down payment and related costs, such as closing, inspections, and other fees, it may make better financial sense to rent.
Click here to find out how much house you can afford.
4. You don’t have a stable job or a reliable income.
A job can be considered stable if you have held it for at least 2 years. If you have seasonal jobs lasting 3 to 6 months, or you have just started a new job, but not so sure how long you’re going to keep it, you may not want to consider buying a house.
Unless you’re buying a house with cold cash, you’ll need a mortgage loan for which you’ll make monthly mortgage payments.
If you don’t have a stable job with regular paychecks, you might not be able to keep up with your monthly mortgage payments.
On top of that, you’ll also need extra money to pay for utilities, maintenance, repairs, property tax, homeowner insurance.
5. You might move out of state.
Do you intend to live in your home for at least 5 years? If the answer is no, then you’re better off renting.
If you’re not sure how long you’re going to be in a particular area (city or state), because of work or family, etc, renting might the best option for you.
Selling a house is much harder than getting out of a lease. If you’re getting out of lease, the worst thing that can happen is that you pay a few thousands bucks.
But with a home, not only does it takes a long time to sell it, but also you’re likely to lose money when you do sell it.
The reason behind it this: the longer you stay in your house the more time you have to offset all of these closing costs and fees.
If you sell within a few years, your home might not have appreciated enough to offset these fees.
Click here to compare mortgage rates through LendingTree. It’s completely FREE.
Of course, there are several benefits of owning your own home. Your home may build equity. There are good tax benefits, etc. However owning a home isn’t for everyone.
You might need to move to another state. You may not have a reliable income.
So before you’re thinking of buying a house weigh the rent vs. buy options to determine which is right for you.
More article on buying a house:
10 First Time Homebuyer Mistakes You Must Avoid
What Is A Typical Down Payment On A House
Shop For A House: Steps To Buying A House
Working With The Right Financial Advisor
You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.