5 Money Moves If You’re Not Buying a Home

Owning a home has long been seen as a wise investment and a way to build wealth for future generations. But with home prices and mortgage rates still historically high, more than a third (38.5%) of renters say they never plan to buy a house, according to a December 2023 report from rental platform Zumper.

The study, which surveyed more than 7,600 renters between August 2023 to September 2023, also found that 69% of renters put off buying or even looking for a house because of inflated interest rates.

In nearly 90% of U.S. markets, median rents for three-bedroom homes are still lower than paying mortgage payments, insurance and property taxes on similarly sized residences, according to real estate data analysis firm ATTOM.

Whether you’ve joined the ranks of “forever renters” or are just putting homeownership on the back burner, CNBC Select has some money moves you should make right now.

Renters might not be on the hook for a broken refrigerator, but if there’s a robbery or fire, renter’s insurance is critical to replace what’s lost or destroyed.

Lemonade policies can be purchased for as little as $5 a month on its easy-to-use app or website, with 30% of claims settled within seconds. The digital-only company earned a relatively high 854 on J.D. Power’s 2023 survey and an excellent “A” grade for financial strength from AM Best.

Additional coverage can be purchased for items not covered by standard policies, including expensive cameras, bikes, jewelry and artwork.

Currently Lemonade is only available in 28 states and the District of Columbia. While Nationwide is a bit pricier — policies start at $20 a month — it’s available in all 50 states. And Nationwide offers discounts for bundling your policies, installing a smoke detector and for not filing a claim in a calendar year.

Its policies cover legal and medical bills if someone is hurt in your home. And if you’re forced to relocate because of a covered event, you can be reimbursed for additional living expenses.

Typically, paying your rent with a credit card isn’t a smart financial move. There are usually transaction fees — typically between 2.5% to 2.9% — and you could pay interest if you carry the balance over into the next month.

But Bilt Mastercard® is designed with renters in mind: You can pay your rent without a fee and, after five transactions in a billing cycle, you can qualify for rewards points. Cardholders earn 1 point per dollar spent on rent — up to 100,000 points per year — as well as 3 points on every dollar spent on dining, 2 points on every dollar spent on travel and 1 point for every dollar spent on everything else.

The points you redeem can be used towards rent, travel and Amazon purchases.

There’s no annual fee and if your landlord doesn’t accept credit card payments, Bilt will mail them a check on your behalf.

You could also consider paying rent with a card — at least for a few months — if you sign up for a credit card with a welcome bonus that exceeds the processing fee.

The Capital One Venture Rewards Credit Card offers a 75,000-point welcome bonus if you spend $4,000 in the first three months of opening the card. That’s equivalent to about $750 in cash, which can be redeemed for flights, hotels, cruises, ride-sharing services and other travel expenses. (Cardholders also receive a $100 credit toward the Global Entry or TSA PreCheck® application fee every four years.)

A few rent payments could go a long way toward hitting that $4,000 minimum. Just be sure to stop using your card for rent payments once the intro period is over and factor in the card’s $95 annual fee in your calculations.

And if you do pay rent with a credit card — any credit card — don’t think of it as a loan: It’s not a smart strategy if you don’t have the money in your account to pay the balance before the grace period ends.

Since most landlords use credit scores when reviewing rental applications, they’re one of the most important elements of securing your dream apartment or rental home. Even if you’re happy where you are, it’s important to keep your score up in case you can’t renew or have to move unexpectedly.

To maintain at least a “good” credit score — between 670 and 789 using the FICO scoring model — you should work to make on-time payments, pay in full and not open too many accounts at once.

In addition, try to avoid hitting the credit limits on your accounts. Ideally, you want to keep your credit card utilization ratio under 30%.

If you have a subprime credit score — or no credit at all— Experian Boost™ can help by tracking on-time payments for bills not typically sent to credit reporting agencies, like rent, utilities and subscription services.

It’s a free service but only useful if a creditor requests an Experian credit report. Your good work won’t appear on reports from TransUnion or Equifax.

About half of U.S. states offer some kind of tax credit to renters, typically an estimate of how much of your rent went toward your landlord’s property taxes.

About half of the states only make the benefit available to renters who are older and/or disabled, according to Rent.com. Many have stringent income or rent limitations: In California, only renters who make $50,746 or less are eligible for the $60 tax credit. (Married couples filing jointly who earn $101,492 or less are eligible for a $120 credit.)

In New York, you can get a credit of up to $375, but only if your household income is $18,000 or less and your rent averages no more than $450 a month.

In most states, you can only claim the credit if your landlord paid property taxes and you don’t live with someone who claims you as a dependent.

TurboTax is a great tool to use to help ensure you’re getting the maximum deduction. It’s not free but it may be worth it if you have a complex tax situation or you’re not sure if you should take a standard or itemized deduction.

Homeowners can use their house as a retirement asset, either by selling it or using it as collateral for a loan. If you’re planning on staying a renter, you’ll need to save more for retirement through other strategies.

Many financial planners recommend putting at least 15% a year toward retirement. When you do stop working, it’s a good rule of thumb to have 10 times your annual salary at retirement age saved up.

If your employer offers a 401(k), take full advantage of it — including meeting your company’s matching contribution, if it’s offered.

You may also want to put additional money into an individual retirement account (IRA). Charles Schwab offers both traditional IRAs and Roth IRAs, with no minimum balance requirements. There are a variety of online retirement-planning tools, as well as on-demand counseling available from Schwab advisors.

If you don’t plan on buying a home, it’s important to optimize your credit and prepare for your financial future. Renter’s insurance, rent-friendly credit cards and retirement accounts are just a few ways to do that.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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