Predictable Monthly Payments. When you lease, finances are much more predictable and typically a fixed amount for the span of the lease agreement. You can budget more effectively since you know the amount of rent you are required to pay. Meanwhile, mortgages and the amount of the property tax and insurance can fluctuate.Being Stuck.
When you lease, there's also less risk of uncovering an unforeseen problem that you are on the hook for financially.No market risk.
When you buy a home, you take on the risk of the home's value changing. By renting, residents are avoiding owing a mortgage that is potentially more than the house is worth.No cash outlay required.
There's a tremendous amount of money required to close on a house, including the down payment and closing costs.Decreasing Property Value.
Property values go up and down, and while this may affect homeowners in a big way, it affects renters substantially less. Home value determines the amount of property taxes you pay, the amount of your mortgage and more. In a rocky housing market, renters are not as adversely affected.Limiting Investment Diversity.
Putting too much of your savings into a single, leveraged investment (your house) could be more risky over the long term than investing in a diversified investment portfolio of stocks and bonds. If you buy more house than you need, the large mortgage payments might not leave enough to save for unexpected emergencies, your retirement, college tuition, etc. An additional $200 a month could grow if you were to invest it in a diversified portfolio and compare it with all the home equity you will build up during the same time through mortgage payments.Home Equity.
Buyers hoping a home will improve their net worth should also make sure they are actually building equity in that asset. A low credit score could force you to pay a higher interest rate, and therefore pay more in interest, meaning that your house might need to appreciate in value more quickly than is realistic to have any hope of building up equity.