The Real Costs of Renting
If you think there’s no chance you could ever afford to buy a home, it’s time you take a closer look at the real costs of renting. You’ll be surprised to learn that owning your own home is comparable (and maybe even a little less expensive!) than renting. Imagine having the freedom to demo a wall to create a more spacious kitchen or to paint your bedroom neon green – things that would definitely cause you to lose your security deposit, or even worse, an eviction notice slipped under the door. The real costs of renting really add up, and in the end, you move out with nothing to show for it. Buying a property is a wise investment and will give you security and freedom to live in a customizable space of your very own.
When you fill out a rental application, the property will charge you a fee of $35-$75 per person. The landlord wants to make sure you’re serious about the place and that you check out as a person they want living in their property. This fee is used to perform a criminal background check, credit check, past rental and employment history, evictions and court records. If you’re applying to multiple properties, these fees really add up. Getting preapproved for a mortgage is free! It’s a quick and painless process, and you’ll find out exactly how much you can comfortably afford.
A security deposit can be anywhere from a couple hundred dollars to an entire month’s rent, due up front when you sign your lease. This money is usually refundable, but only after the property is inspected after move-out and no fixes are required. We’ve all been there: scrubbing an apartment within an inch of your life, trying to get out any stains in the carpet and patching up holes in the wall because you are desperate to get your entire security deposit back. Am I right? And just think, your security deposit could be your first mortgage payment!
Rent-controlled places are few and far between these days. Most rentals increase monthly rent on a yearly basis, not only creating anxiety waiting to hear just how much the increase will be, but also figuring out how to create that extra wiggle room in your budget. With a mortgage, you can lock in a rate and enjoy the mental comfort of a steady, unchanging monthly payment for the life of your loan. There are also tax breaks associated with new home ownership. Things like mortgage interest, home equity loan interest, property taxes, energy credits, among others, can be written off, saving you money at tax time.
When it comes to pets, two things are certain: They’re great companions AND they have a tendency to make messes. Because of the latter, most landlords charge a pet deposit and/or pet rent. If you’re lucky enough to get away with just a one-time deposit, it’ll set you back anywhere from $100-$500 along with your regular security deposit, and will likely be refundable upon move-out, assuming there’s been no damage done. Pet rent, however, is a recurring, non-refundable fee that can cost you anywhere from $15-$50 per pet, per month. Whereas in your new home, your four-legged BFF can live rent-free!
Parking can be a deal breaker in any living situation. Imagine having to move your car from one side of the street to the other to avoid ticketing, street sweeping, and the like. Although some rentals provide parking, some require that you rent an assigned parking spot in addition to your monthly rental cost. Is the convenience of an assigned spot worth the possible brick of gold you have to pay for it? Possibly, when you think about carrying groceries to your apartment from the farthest possible parking spot… in one trip, of course.
Things like a pool, gym, and community room are great, but they come with a price tag. So, while these features seem amazing when touring a rental, you have to think, “Will I use these things enough to warrant the higher cost, or will that fancy gym go the way of my past gym memberships?” Also something to take into consideration: laundry. Apartment dwellers know the pain of lugging laundry back and forth to a shared laundry room and paying a pretty penny to wash and dry. After you’ve experienced the dreaded four-hour laundry event, week after week, year after year, a washer and dryer of your very own will never be taken for granted. This extra money spent could be going towards an HOA fee, giving you unlimited access to community amenities, garbage pickup, and snow removal.
When you break down the costs of renting, home ownership suddenly becomes a real possibility. Instead of putting your hard earned money into a temporary living situation, invest in a home that will be yours for the long haul. Ready to get started? Talk to a Personal Loan Consultant to learn more about your home loan options. We’ll help you find a mortgage you can manage.