The American Dream has changed a bit. The Great Recession of 2008 has made the reality of owning your own home a little bit more tricky. The number of American homeowners has dropped from a solid 69% to a little over 65%. With the bursting of the U.S. housing bubble, the subprime mortgage crisis, and plummeting home valuations, owing a home may be just a little bit farther out of reach.
Not to worry! The amount of Americans renting has gone up significantly and is a more affordable short-term living option for many Americans. Here are a few reasons to consider renting instead of buying.
Risk and Responsibility
As a renter, the majority of property responsibilities rest on the actual homeowner, not you. A pipe bursts? Just call your landlord. Many renters are responsible for light maintenance costs versus major repair problems that homeowners are responsible for. This is a good option to consider for college students or young family who might not have the disposable income that homeowners require to cover repairs.
No Down Payment
It is recommended that you provide at least 10-20% of the cost of the home as a down payment. Easier said than done. Renting while accumulating the money necessary for a significant down payment is a good option. Renting typically only requires the first and last month’s rent, which is less than the down payment on a home. Have a significant amount of credit card debt or student loan debt? Rent while you pay off your debt and improve your credit.
Purchase a home in a bad neighborhood? Buy a money pit? You’re stuck. Renters have the luxury of a 6-month or one year lease agreement, and it is often not too difficult to break. Say you get a job offer in another town. Renters can easily move locations. This is good to consider if you are just getting started in your career and are applying for many opportunities.
Take the time to review your finances to consider if renting would be beneficial for you and your family. If renting seems like the right option for you, consider purchasing a renter’s insurance policy. Renter’s insurance provides a large amount of coverage for a small premium and is a good deal for your money. Contact us if you have any questions regarding a policy.