Make Money From Home

3 Signs You’re Better Off Renting a Home This Year – The Motley Fool

Image source: Getty Images

It could pay to rent if these things apply to you.


Image source: Getty Images

It could pay to rent if these things apply to you.

Key points

  • There are financial benefits to owning a home over renting one.
  • In some cases, renting makes the most financial sense.
  • If you’re worried about your credit score or job security, renting could be the better choice. 

At this point, a lot of would-be buyers are getting frustrated with their lack of progress on the homeownership front. Home prices have been inflated since the latter part of 2020, and that alone has been a deterrent for buyers on a budget. 

Compounding the problem is that housing inventory has lacked in a very big way. That’s put buyers in a position of having to overbid on homes and still risk losing out. And, there’s been a limited supply of starter homes on the market, which has been a particular problem for first-time buyers. 

Still, you may be tired of renting and itching to buy a place of your own. But if these three things apply to you, renting could make the most sense this year.

1. You don’t have a 20% down payment to put down

Home prices today are very expensive. Plus, taking out a mortgage has gotten more expensive. That’s because mortgage rates have been rising sharply since the start of the year, and they’re likely to continue climbing. 

That means you probably can’t afford to make homeownership any more expensive for yourself. And if you don’t have 20% to put down on a home, then you can bank on your mortgage costing you more. 

You’ll be hit with private mortgage insurance, a costly premium that gets tacked onto a conventional mortgage, when you don’t make a 20% down payment. As such, you may be better off renting this year and waiting to buy until you can save more money to buy a home with. 

2. Your credit score recently took a hit

As just mentioned, borrowing for a home has recently gotten more expensive. And if your credit isn’t great, it could end up being even more expensive for you

The lower your credit score, the more interest a lender might charge you for a home loan. That’s because a lender is apt to feel like you’re more of …….


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