Too often you hear that renting an apartment is just throwing money away, whereas owning a home is an investment in your future. Harvard University has done a study that has shown that there are times, places and situations where renting makes more economical sense than buying.
Some of the most prominent myths are listed below with additional information which may change your mind about renting versus owning.
Is renting throwing away money while home ownership is building equity? Actually, for the first five years of your mortgage most of the money you are paying for your mortgage goes to pay interest only. You’re not actually creating equity until after five years and a third of all people move within those five years, meaning they never actually begin accumulating equity.
Are mortgage payments less than rent? It depends on what you decide to spend on rent or a mortgage, but keep in mind that there are a lot of hidden costs involved with homeownership and when there is a big expense or repair it is entirely your responsibility.
The third myth is that purchasing a home is a safe investment and the current U.S. housing market proves that this is simply a myth and nothing more.
So, if you’re not planning on staying in one place for a long time and you don’t have a good cushion for emergencies then renting may be a smarter move, especially until the housing market picks up.
