Why We Rent Our Home

Avery loved to sit in the sink in our first rental home.

 

We rent the home we currently live in. Often when people find out we rent, they ask us why we haven’t bought a home where we live yet, since we’ve now been here nearly three years. Most people assume it’s because we won’t be in the area for long, which could be. We don’t really have any plans for how long we will live here, knowing that it could be a few more years or it could be where we stay forever. We’re okay with either option. I’ve even had people, when finding out we rent (a very small house at that), assume it’s because we are struggling financially. I know there are others out there who rent, and wish they could buy finance a house, but I think you should stay a home renter for a little while. And I thought that I would tell you why.

While Carl has a great job and we could choose to take out a mortgage if we wanted to, we don’t feel that it’s the wisest decision for us financially right now. Here’s why:

 

Monthly costs to rent where we live: 

Rent:  $600

Renter’s Insurance: $12

Utilities (on average): $150

Total Monthly Cost to Rent:  $762

To make it even, I’m going to use a house that is comparable to what we live in now. If we were to realistically  buy a home, it would be much different from what we live in now, but this is only for comparison sake. I am using a small home, one with two bedrooms but a third in the basement, meaning it has room for expansion. The house we live in now is two bedrooms, but we have an unfinished basement we could use for living space if we owned it and put a little work into it. The house is listed at $150,000, which is a very low, reasonable price. So the following figures are for a home that is financed for $150,000 with a 30 year fixed mortgage, a 5% interest rate and a 20% down payment (thus no PMI).

Monthly costs to own a similar home where we live:

Mortgage Payment:  $956

Property Insurance:  $45

Average Utilities:  $150

Property Taxes:  $122

Total Monthly Cost To Purchase a Home:  $1,273

Monthly Savings to Rent vs. Buy:  $511

Yearly Savings to Rent vs. Buy:  $6,132

This is obviously an estimate. It is pretty cheap to live where we live compared with the rest of the country (our cost of living index is around 85, I believe). And the thing is, if we were to buy a home we would probably spend more like $250,000 so the costs would be significantly higher. This cost breakdown does not include maintenance and upkeep of the home either.

Our theory is that by saving and investing our current savings of around $6,000 dollars per year, our money is multiplying. While we would get a small tax break from financing a home, it is trivial compared to the amount we can save monthly. So yes, someday we will own our own home. But when we do, we will actually own it, not just finance it. I don’t consider taking on the responsibility of a mortgage, essentially more debt, to be “owning a home” as so many people love to claim. If that is what works best for your family, great. I know that the way we do things isn’t what’s best for everyone, but it is what’s best for us. And we have reasons behind why we are making the choices we make, rather than being “stuck” in a rental as some may assume.

So if you rent your home but are longing to buy, maybe take a step back and look at your situation a little differently. You may be in a place that is a blessing, an opportunity to be patient so you can be a homeowner without the stress later on in life.

No Comments

  1. Melissa -  December 10, 2012 - 12:48 pm

    I think this is a great idea. In fact my husband and I are in a similar position. My parents had extra space in their house (5bed) so we stayed with them instead of renting. Renting where we live can be expensive €1,200 for a nice place nothing fancy just clean with 2 bedrooms! We now pay our share of the bills which is less than half of what we would spend on rent! We’re saving to buy a house not saving to get more debt!!

  2. Amanda M S -  December 10, 2012 - 1:23 pm

    I like this post. We rent too. And I’m a realtor! LOL. The reason we rent is because when we finally do buy a home, we will probably end up building a custom home with all the bells and whistles. I don’t see that happening for about 2 more years. But like you, since I cannot afford a $250,000+ home now, I’m just going to wait until I can. Our last two homes as a married couple have been brand new homes so I have been satisfied to live in them. Our current home now we rent and it’s a gorgeous brand new home so I’m not complaining. Also, I’d like to put down 20%. The government programs out right now let you purchase a home from 0-3.5% down. That scares me. It’s a great option for a lot of people (gov’t financing) but I have my own personal view on it and would really prefer to do a conventional loan. I’m glad you made this post. A lot of people feel like they aren’t “grown up” until they own a home. Renting is a good option in a lot of cases. Now, I wouldn’t be doing my job if I didn’t tell you to call me when you finally decide to buy a home 😉 (I kid! And rates are actually under 4%.) xxx Great post!

  3. Belinda -  December 13, 2012 - 10:32 pm

    I’m with you! We rent, and won’t purchase until we can actually own.

  4. Trisha D -  January 16, 2013 - 10:35 am

    I love this!!! We rent (and cannot afford to buy), but we will continue to rent long term for the reasons you’ve explained and so many more. Hot water heater breaks: landlord pays. Roof needs work: landlord pays. We are very fortunate to rent from family so we also have “creative license to make the home our own! We can paint, change flooring, landscaping etc! It’s like having the best of both worlds!

  5. Niki -  January 22, 2013 - 8:32 pm

    We rent too. Much cheaper and if something breaks, we don’t have to pay to fix it.

  6. Juli -  January 23, 2013 - 11:26 am

    With our insurance and taxes its $807 but our interest is 3% and our house is about $120k. It’s our forever home so in 30 years it will be our. No more mortgage unless we pay off early and it’s big! 4 bed! Can’t beat that since the comparable rentals are about $1300 here

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