why do people insist that paying rent is "throwing money away"? it actually is providing a roof over my head!

Answer 1

Yes, when you pay rent, you get a roof over your head. When you buy, you get the roof over your head, plus you build equity that later is money in your pocket when you sell the house.
Paying rent does make sense though for living somewhere short-term or for someone who can't handle the extra work of maintaining a house and yard.

Answer 2

All of the answers are correct. For my two cents, I suggest paying down a mortgage is also a bad idea for all of the reasons mentioned.

Your mortgage does not effect the appreciation in your home. The mistake people make is that a mortgage is by far the cheapest money you can borrow and by paying it off too quickly you are loosing the opportunity to leverage your wealth.

For instance, if you were to obtain an interest only loan for 15 years then amortize the principal balance for the remaining 15 years, your monthly payments will be hundreds of dollars less on a monthly basis. You then can take advantage of the savings by putting those funds in even a marginally yielding investment vehicle and you will have increased your net worth by 40% or more over the same 30 year period paying the larger mortgage.

If you are renting you don't have any of those investment opportunities or tax savings and are "throwing your money away"
I am in the business if anyone is interested!

Answer 3

Renting is necessary for a lot people. They're not knocking it - directly. HOWEVER, there is an opportunity cost to renting. Renting means you're not buying. When you buy, you generally pay about the same in a mortgage as you would in rent. HOWEVER, you build up equity. Also, when you pay a mortgage, it never goes up (generally). That means that even as inflation chips away at the value of the dollar, you pay a fixed price, so the effective cost goes down. This doesn't even include the tax benefits of a mortgage.

Renting is better than living on the street, but much worse than owning. So, that's why they say you're throwing money away.

Answer 4

There are 2 main reasons:

1) the tax advantages of a mortgage. you are able to deduct the interest you pay on your mortgage, which depending on your tax bracket can be substantial.

2) buying a house builds equity. in most housing markets today (though this will not ALWAYS be true) a house will gain in value over time, and that is for the owner, money in the bank.

although it is not financially smart, renting is fine option for a number of people, who dont plan to stay in an area for a long period of time or have a poor credit rating.

Answer 5

Basicly you are paying your Landlords mortgage payment, when you could be paying on your own and building equity. If you think you can not qualify for a loan, if you have 2 year job history, income, anything is possibly.

There are other factors to consider, besides credit. Job time of 2 years, collections on credit report - judgements on credit report. All of these are taken in as a factor on getting a home loan. Credit can be worked on, by adding alternative credit. If you are paying regularly on a cell phone, auto insurance, rent, etc - these are called alternative credit


If money is tight, check out the usda.rural programs in your area. The payments are based on a sliding scale.

Go to: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Answer 6

When compared to owning your own home it can be considered throwing you're money away. For example, if you rent for $500 a month versus buy for $500 a month at the end of the day renting shows no gains whereas with buying you can sell what you own, hopefully for a gain. That's why. If you like renting and it works for you then go for it.

Answer 7

you can most often, buy a house cheaper than you can rent!
if you plan on being in this location only a short time renting is fine but if you will be there 5 or more years try to buy a house. A house you are buying will make you money, rent money is gone for ever!

Answer 8

Because a home is basically a long-term investment with short-term advantages which generally increases in value over time. The other part of this equation is that there are huge tax advantages to owning a home. Last year I realized $9000 in tax savings because of my home mortgage interest.

Answer 9

ha, hey liked the 'didn't you already ask this question?' heh heh. You must've heard it's 'giving somebody else investment money'.. but soooo?? You sound grateful (kinda humble even) for the roof.. why's somebody gotta give ya a hard time for that? hell, there are a lotta homeless people over there.. (I think it's great you are happy with where you are at, man!) later melancholia

Answer 10

It's like renting a car vs. owning one, or renting a tv at rent-a-center vs. buying it. Why piss the money away on something that will never be yours.