Dear Olivia,

I’m a renter and pay a reasonable rent each month. My landlord pays for all my utilities as well. I find it hard to believe that buying a home could be cheaper. Am I missing something?

Renter For Life

On the surface, renting a home might seem cheaper than owning. Like you said, your landlord pays all the utilities which is a huge savings for you. Additionally, if a pipe bursts or the air conditioning goes out, your landlord has to fix it, not you.

But if you dig a little deeper, you begin to understand why renting isn’t as cheap as it first looks.

For starters, there’s no guarantees that next month your rent won’t go up. And if you rent for long enough, you might find that what you pay a couple of years down the road is significantly more than what you pay now.

When you own a home, though, you can get a fixed monthly payment so you know exactly what your housing expenses are from month to month, year to year. That definitely helps in budgeting and planning for your future!

Speaking of your future, if you rent, you’re not building any equity in the property whatsoever. This is actually the biggest hidden cost of renting because it’s more of what you miss out on rather than what you actually pay.

For example, if you rent a home for five years, the home will most likely be worth more at the end of that five-year period than it was at the start. That’s great for your landlord, but what do you have to show for it? Conversely, if you buy a home, after that same five-year period, you’re the one with the equity in your property. You can then use that equity for all sorts of purposes - getting rid of private mortgage insurance sooner, using it to make home improvements, use it to consolidate other debt, or just creating a higher level of financial security.

Yet another way that buying a home can be cheaper is that there are many financing programs available that require little or no money down. That means you can get into your own home without having to shell out a bunch of money like first and last month’s rent and a security deposit when you’re renting a property.

Furthermore, there are plenty of homes on the market today that are highly affordable - our #PerfectStorm properties being a perfect example. Most of these homes are priced well under $150,000, and with an abundance of financing options, you might just find that a monthly mortgage payment is even less than what you pay in rent.

I know that making the leap from renting to owning is a big one - I certainly found it nerve-wracking when I bought my first home. But the financial benefits to be had in the long run certainly make it a wise move!

If you have any other questions about renting or buying, don’t hesitate to stop by my office at 309 N Broadway in Riverton or call 307-856-3999!