Well-known financial adviser Dave Ramsey said renting is a strategic choice — not a waste of money. It can save people from becoming ‘house poor,' a situation where owning a home stretches your finances too thin, leaving little room for other expenses and savings.
Renting allows people to buy time, until they can purchase a home.
"Just because a mortgage payment might be less than rent doesn't mean it's the right time for you to buy a house," Ramsey wrote in a May 7 post on X. "There are a LOT more expenses that come with homeownership than the monthly payment."
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Those expenses include maintenance, homeowners association fees, homeowners insurance and fixing or replacing a broken HVAC system. Renting can be a prudent financial decision, providing the flexibility and financial stability needed to prepare for homeownership without the risk of overextending yourself.
"When the home is yours, all those expenses are up to you," he wrote. "When you're renting, you're free from that added financial responsibility."
Ramsey recently outlined the criteria potential homebuyers should adhere to before purchasing a home: Be debt-free, keep enough money in an emergency fund to cover three to six months of household expenses and never take out more than a 15-year fixed-rate mortgage. He also suggests making a 20% down payment to avoid paying private mortgage insurance.
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If you can do all of those things, Ramsey said it's wise to purchase a house now, rather than wait for interest rates to drop. If interest rates drop, house prices will go up. And you can always refinance when interest rates are lower, he said in a blog post in March.
Ramsey isn't the only high-profile social media personality advocating for renting. Last month, real estate mogul Grant Cardone outlined why renting is a better choice than buying. For one, apartment buildings have better amenities, such as pools and gyms, and provide a community of people with similar interests.
He also noted that rents are half the cost of a mortgage, with interest rates over 7%, and homeowners insurance and property taxes are "exploding" for homeowners.
In a statement on ‘The Money Mondays Podcast' in November, he said, "If renting doesn't make sense at half of what it costs to pay the mortgage, how does the mortgage make sense, which is just a fancy bullsh*t word for paying rent for 30 years to the bank."
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