Renowned financial advisor Dave Ramsey said renting is a strategic decision – not a waste of money. It can save people from “house poverty,” a situation in which owning a home puts too much strain on your finances, leaving little room for other spending and savings.
Renting can give people time to buy a home.
“Just because a mortgage payment may be less than rent doesn’t mean it’s the right time for you to buy a home,” Ramsey wrote a post from May 7th on X. “There are MUCH more expenses associated with homeownership than the monthly payment.”
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These costs include maintenance, homeowners association fees, home insurance, and repairing or replacing a broken HVAC system. Renting can be a prudent financial decision and provides the flexibility and financial stability needed to prepare for home ownership without the risk of overextending yourself.
“If the house is yours, all costs are yours,” he wrote. “When you rent, you are freed from this additional financial responsibility.”
Ramsey recently laid out the criteria potential homebuyers should consider before purchasing a home: Be debt-free, have enough money in an emergency fund to cover three to six months of household expenses, and never take out a fixed-rate mortgage with one Term of more than 15 years. He also suggests making a 20% down payment to avoid paying private mortgage insurance.
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If you can do all of these things, Ramsey says it’s smart to buy a home now instead of waiting for interest rates to go down. When interest rates fall, property prices rise. And you can refinance at any time when interest rates are lower, he said in a blog post in March.
Ramsey isn’t the only well-known social media personality to advocate for renting. Last month, real estate mogul Grant Cardone explained why renting is a better choice than buying. For one, apartment homes have better amenities like pools and gyms and offer a community of people with similar interests.
He also pointed out that with interest rates above 7%, rents are half the cost of a mortgage and that home insurance and property taxes are “skyrocketing” for homeowners.
In a statement on the Money Mondays Podcast in November, he said: “If renting doesn’t make sense at half the cost of the mortgage, then how does the mortgage make sense?” That’s just nonsense.” Word for paying rent to the bank for 30 years.”
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This article Dave Ramsey says renting is a smart financial move to avoid becoming ‘house poor’ originally appeared on Benzinga.com
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