Why your rent is often more than your mortgage payment

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Stacks of moving boxes in a sun room

Photo: vtwinpixel (Shutterstock)

Tenants fspoiled by headlines about hot housing market that makes it seem like it’s theirs last chance to buy property will not be comforted by messages that rent payments at present above the average monthly mortgage payments… But comparing monthly cost of ownership and rent is not easy. as home ownership entails a bunch of hidden costs. In fact, perhaps there is the benefits of using a lease, even if home prices are going through the roof.

Why is the rent higher than the cost of the mortgage?

Commenters in this Reddit theme better to say: “Your rent is most will you ever pay every month. While your mortgage is least will you pay every month someday. ” Why is that? Well, homeowners should cover expenses that the tenant will not have to pay, at least directly:

  • Property tax: $ 2,471 per year, on average (and many-many more in someReas)
  • HOA monthly payments: $ 250 per month, average
  • Repair and service: $ 170 per month, average
  • Homeowners insurance: $ 80 per month, average
  • Utility bills: $ 200 per month, average
  • Private mortgage insurance: $ 160 per month, average
  • Flood insurance on demand of the lender: $ 61 per month, average

Other possible expenses could include garbage collection, water and sanitation services, pest control, tree pruning, maintenance of amenities, etc. and earthquake insurance. Landlords are still paying these costs, of course, but A lot of them included in the rental price.

Of course, as any jaded renter knows, you can get stuck in poor or cheap homeowner who saves on repairs and pest control. However, the costs are real and they are on the top that the owner pays the mortgage (a more detailed breakdown can be found in this post is Lifehacker).

At the same time, pity is not required – at home are also assets that tend to rise in value, often above 10% annuallyso they are very valuable even at the current cost of owning them.

Why rent is not so bad

Certainty of costs and flexibility are underestimated aspects of renting. When you rent, you know exactly how much are you going to spend on housing each month. Unlike a homeowner, you don’t have a 30-year mortgage obligation to worry about, and you don’t have to pay unexpected expenses like a new HVAC system or boiler for several thousand dollars apiece.at least not directly. Another advantage of renting is that, unlike home ownership, it is much easier to move when you change jobs, grow your family, or find a better and cheaper place to live. This, of course, does not make renting more affordable, but it does have its advantages.

How to know if the rent is too high

Research and compare rental rates for similar properties in the area where you want to live and determine average monthly rate for an apartment number of bedrooms and amenities you are looking for… It is also how many homeowners define your own prices, So use your research as leverage to negotiate a lower monthly rent… If you don’t like what is being offered, you will at least have the opportunity to look elsewhere.

It’s also worth mentioning here: if you are delaying your rent payments as a result of the pandemic, consider your rental assistance options as outlined in this post is Lifehacker

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