Why You Should Rent a Home Instead of Buying

Most people have heard that it is better to buy a home than to rent because the money that goes for rent is wasted compared to a home that would be an investment for their future. Even though this sounds right logically it is not sufficient in theory. Many people are no where near ready to own a home. Most people who have bad credit or are in a lower income bracket will fall prey to predatory lenders when buying a home. There are many factors that go into successfully buying a home. A persons credit must be over 620 to qualify for a good interest rate loan. Anything under 620 a home buyer could end up with an adjusted rate mortgage that has a lower interest rate and lower monthly payments in order to get the home buyers in the home, but after a few years the mortgage will readjust to a much higher monthly mortgage payment. People who are unable to afford the new adjusted rate will end up in foreclosure.

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Having high debts is another reason why a person should rent instead of buy a home. Mortgage lenders use two different ratio criteria to qualify a person for a home loan. That is a front and a back end ratio. The front ratio will consist of the payment for the mortgage, insurance, and taxes, which will then be divided into a persons salary that they receive every month. Deciding the back end will involve adding a persons debts to the amount of the mortgage payment after the insurance and taxes were added in. Whatever that total comes to will then be divided by the persons salary. If the amount is more than what the person makes a month they will not qualify for a loan to buy a home. The amount of the mortgage payment would also depend on whether a person applied for a 15 year or a 30 year mortgage. If it is a 15 year payment plan the mortgage will be much higher a month. Most mortgage payments will end up costing more than a person would pay monthly for rent.

It is much better to pay rent for a home if a person is not stable in their job, or if they tend to move around a lot. When buying a home a person must have a stable job and be planning to stay in the home for many years. If the person knows that there are a lot of lay offs at their work place that would not be considered a stable job because that person could lose their job at any time. Until a person is ready to buy a home and has all of their affairs in order they should continue to rent. Rental prices will be much lower than most mortgage payments. People who make higher incomes will be more ready to buy a home than someone whose monthly income fluctuates.