10 Signs You Should Rent Instead of Own

If you're looking for a new place, the first question you're probably asking is whether you should rent or own.

It's the question that comes before all others in real estate -- and for good reason, as it will determine a lot for your finances and your experience in your home.

There are a number of good reasons to own your own home, but it's not the right choice for everybody, and it's not right at every time in life. Here are 10 reasons you may want to consider renting instead of owning.

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Buying and selling a home is a costly, time-consuming and stressful process. Closing costs can run in the range of $10,000 for buyers, and sellers typically pay a 6% commission on the selling price. You'll probably need to keep your home for at least a few years to pay off those costs.

So, if you're not sure you want to stay in the area for at least a few years, renting is probably the better choice. It gives you more flexibility if you decide the neighborhood isn't right for you.

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Renting could also be a better fit if you're unsure about your job status.

Though both renting and paying a mortgage will require a steady income stream, renting is the better choice if you think your job could, say, move you to a different city -- or even give you a significant salary bump that would enable you to improve your living standards.

If you're in the market for a new job as well, it's probably not a good time to buy a home since you don't know how much you will be able to afford and may want to be open to a job in a new location.

Owning a home comes with responsibilities beyond just paying a mortgage each month. You're responsible for the maintenance and upkeep on the home. That could include obligations in outdoor spaces -- like landscaping, mowing the lawn, raking leaves, and shoveling snow -- as well as things like making sure the HVAC system won't fail and that the roof is still solid.

Even if you choose to outsource most of that work, you're still responsible for managing it. The easiest way to deal with those problems is to be a renter and have a landlord who handles them for you.

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If you don't have any money to put toward a down payment, renting is probably the better option for you. While you can still buy a home with only a few percent down, you'll almost certainly pay a higher effective mortgage rate and have to carry primary mortgage insurance until you've accumulated at least 20% in equity.

If that's the case, you'll likely be paying more per month than you would to rent a comparable home. So, even if your goal is to own your own place, you may be better off renting for a few years and saving up some money toward a down payment first.

Buying a home typically requires a down payment of some kind. Though 20% tends to be the standard that banks prefer, the average down payment for a first-time homebuyer is just 6%.

Depending on the price you're paying, that can still represent a lot of money that's tied up. If you're renting, you won't have that problem. And if you want to maximize your liquidity so that you have money to invest in your own business or the stock market, renting is the better choice for you.

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Your job situation is one of the considerations you'll have to make when deciding whether to rent or own, but you should also consider the particulars of your life outside of work.

If you're young and dating, for example, you might not want to commit to owning a home, as you could end up living with a new partner in just a few years. Similarly, it could make more sense in a new relationship to live in a different neighborhood.

ALSO READ: 6 Reasons to Keep Renting Instead of Buying a Home

Your credit score plays a key role in determining the mortgage rate you can get. It's best to have a credit score of 720 or above.

If your credit is still lagging and you're interested in buying a home, you may want to spend a few more years as a renter, building up your credit history before taking the plunge into homeownership. Over the long run, bringing down your mortgage rate could save you more money than if you purchased a home with a low credit score.

If you travel for work often or have a lifestyle that allows for a lot of personal travel, renting could be the better move for you.

The upkeep and maintenance of owning a home require someone to at least be able to check on the place as needed. If there's a big storm, you'll want to make sure no tree branches have fallen on the house, and you never know when the house could spring a leak or something like that.

If you're not home when an emergency happens, the damage to your home could be much greater than if you're there to address it. If you only plan on spending, say, half the year in the home, you may save yourself a lot of stress by renting.

ALSO READ: How To Make Money in Real Estate

If you're working incredibly long hours or you've just entered retirement and want to relax, renting could be the best option for you.

Probably the biggest advantage of renting over owning is that as a renter, you get to avoid much of the stress -- manifested as worrying about your home and the time and effort it takes to maintain it -- and hassle that come with owning a home.

If you want to be done with the chores and the responsibility of owning a home, renting makes the most sense.

Often, renting or owning comes down to a lifestyle choice. If you want to live in a luxury home in a hip downtown neighborhood, renting will probably be your best option. There are likely to be many more rentals in such neighborhoods than places for sale, and list prices may make buying a home there out of reach.

On the other hand, if you're in the market for a single-family home, especially in a suburban area, you'll probably have more luck if you're willing to buy a place rather than look for a rental.

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Like a lot of life's biggest decisions, the choice of whether to buy or rent ultimately comes down to trade-offs.

Are you trying to build equity, or would you rather have liquidity?

Do you want the responsibility of homeownership, or do you want to free yourself of some chores and stress?

Do you feel committed to the area you're living in, or is there a good chance you might move?

The best way to decide whether to rent or own is to ask yourself questions like these. There's no perfect answer here, but considering the benefits of each one, as well as your own needs, is the best way to make the right decision.

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