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For many Americans today, renting has become the default
choice. But, is that so bad? There have always been two
ways to look at the rent /own choice: The practical and
the financial perspectives.
First the practical:
Do you plan on staying in place for more than 10
years? In today’s job market, the likelihood of
relocation for a job or in search of job is much higher
than just five years ago. Unless you are certain you
will remain in one place, you may be better off renting.
Do you have the time and money for home maintenance?
Most people forget to add in the expense and time of
home upkeep. If you’re too busy or too stretched
financially, you may be better off renting and letting
the landlord take care of it.
How about the financial perspective?
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In past years, when real estate was
appreciating at more than 5% per year, you
could have easily plugged the numbers into a
“rent vs. own” calculator and, assuming you
could qualify for the best financing rates,
the numbers usually tilted towards owning as
the better financial alternative. |
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In today’s economy, real estate is not a sure bet for
appreciation, at least in the way it had been. You could
also expect property taxes to increase in many regions
to cover state and municipal deficits.
If looking at it from an investment perspective, home
ownership doesn’t hold the same advantage that it once
did. Renting at a fixed monthly cost and then saving the
difference (that is, if you actually do save the
difference) can produce equally fruitful results if not
better over a ten to twenty year period.
For many the “pride of home ownership”, which is neither
a practical or financial consideration, is still the
driving motivation to buy a house. For more and more
people, saving for the future is of greater concern. In
the end, the “rent vs. own” decision should come down to
financial priorities and practicalities.
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