How To Take Advantage of Renting Over Buying

Most real estate agents will tell you, without hesitating, that it is always better to buy than rent. In many instances, in fact, most instances, this is probably good advice.  Here are some situations where renting makes more sense than buying.

  1. Interest rates. If you do not have much money to be put towards a down payment, if your credit report is hindering your ability to secure a loan at a decent interest rate, or if your mortgage broker cannot get you an attractive overall package, it may be a good idea to wait until this changes.  Typically speaking, the more money you put down at closing the lower the interest rate.  If you think that, in the next year you may be able to muster up more cash, wait. If you think that your credit report has blemishes and you can clear them up in a year's time-wait. 
  2. Job uncertainty.  If you are a professional working with a company that can, or does, transfer you to different cities in short periods of time, then it may not make sense to buy.  Renting allows you the flexibility of moving at the drop of a hat.  If you are a professional on the move, make sure any lease you sign is a "tenancy at will", meaning, you can leave on 60 days (or a different agreed upon time) notice. Breaking a lease can be expensive, so keep this in mind. 
  3. Traveling. If you are constantly traveling with your job; particularly overseas, you may want to consider renting until you find the place you want to settle in. Owning a home requires that you are around (or someone reliable is around) to maintain your property.  Being an absentee landlord or owner can be stressful since you are never able to take proper and full care of your purchase. 
  4. Not a care in the world. If you are of the mind-set that you do not want to deal with any problems associated with the place you live in (a leaking roof, a bum-faucet, or decaying siding), then you may want to consider extending your lease.  The landlord is responsible for fixing any issues arising in your abode. 
  5. Risk. The housing market is uncertain just like any other market.  The crash in the late 1980s was a financial blow to many investors and home owners.  Buying a house automatically increases your financial risk.  As a result of your recent home purchase you will need to increase your car insurance to protect your new asset in the case of an emergency (so someone cannot sue you for your home).  If your mortgage rate is adjustable you may experience an unpleasant increase in mortgage related costs, and there is always the threat of foreclosure in the instance of bankruptcy and financial woes.

These are the main reasons why a person may opt to rent.  If you can afford a down payment and your interest rate is manageable, it is a good idea to research buying a home or condo.  If your job is unreliable and you may be transferred, buying still might make sense.  Explore the rental market in the area you are going to be living in (for the time being). If you can rent out your condo or home for the same amount or more than your mortgage (even slightly less) then buying is a good option. Similarly, if you are unsure about the market and do not want to take a big risk, simply buy lower than what you can afford-in other words, buy safely.

 

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