To rent or to own? This is the question! For many, renting is a cheaper alternative to owning a home, particularly in certain areas of the country.
Get the lowdown on reasons why renting might be the affordable housing choice for you.
One of the ways that rental living is unique compared to owning a home lies in upfront costs.
To purchase a home, buyers have to lay out a significant amount of cash before they get the keys. Down payments range from three to 20 percent of a home’s purchase price, in addition to other cash closing costs, including taxes, home owner’s insurance and title fees. Buying a $100,000 home might cost as much as $5,000 just to move in, for example.
Not so with renting. Renting an apartment home is a cheaper alternative to owning because the upfront costs are much less of an investment. The upfront costs of renting typically include an application fee, security deposit and possibly a pet deposit. While a security deposit may well be a chunk of change, the move-in costs associated with apartment living don’t come close to totaling the cash outlay needed to close on a home purchase.
Monthly living costs
One financial relief about renting an apartment is that you know what the monthly costs will be. The amount of your rent is set in the lease you sign. You always know when the rent is due, and you know it’s not going to change, at least for the period of the lease.
For homeowners, a fixed monthly mortgage payment may not be the case. Adjustable rate mortgages mean that sliding interest rates can cause a homeowner’s payments to fluctuate. And property tax rates can change as well, which also affect a homeowner’s monthly bottom line.
Thanks to the lease contract, the financial commitment associated with leasing an apartment is clear. In a lease, each obligation is outlined, from rent and security deposits to charges for rekeying locks or terminating the lease early. Nearly every financial detail is clearly spelled out.
Homeowners, on the other hand, know to expect financial surprises from time to time. Home maintenance, for instance, is one of these potential surprises.
In an apartment, property management is typically responsible for most repairs — everything from fixing leaky faucets to repairing roofs. When you own a home, however, all of these duties fall to the homeowner. Taking care of a major repair like replacing a hot water heater, for instance, requires a ready emergency fund to pay for the surprise.
With apartment living, there really are fewer financial surprises. And that makes apartment life an affordable housing alternative that offers more security and peace of mind than you might have considered.
Photo Credit: Shutterstock / Andrey_Popov