Buying vs. Renting

By Jeff Wellman

When looking for a new home many people find themselves wondering if they should buy or rent. Both are serious financial commitments, yet they’re very different. Many factors go into deciding whether buying or renting is best for you.

Before deciding between renting or buying, it’s good to consider the pros and cons of each.

Renting

Pros

  1. When you rent you know the exact amount of your out-of-pocket costs each month. They won’t change for the term of your lease.
  2. Utilities and HOA fees may be included in your rent. Again this eliminates extra and unknown monthly costs.
  3.  You have the freedom to move immediately.
  4. You aren’t responsible for maintenance. This frees up time and money.

Cons

  1. When your lease is up for renewal, your landlord can raise your rent by any amount unless you live where there are rent control laws. 
  2. If you move before your lease is up you may lose your deposit or be charged a fee for breaking your lease.
  3. The landlord can sell the property and force you to move.
  4. When you rent you’re not building equity with the money you spend on your housing costs.
  5. You can’t make permanent design changes to your home without permission from the landlord. You may not even be able to choose paint colors.
  6. You may have to follow rules outlined by the landlord such as no pets allowed.

Buying

Pros

  1. Owning a home provides stability for you and any family members who live with you since you’re completely in control of choosing to move or not.
  2. There’s a sense of pride and accomplishment that comes with owning your own home.
  3. You have the freedom to decorate and remodel your home any way your choose.
  4. Your monthly mortgage payments build equity you can recoup when you sell your house. Any other money spent on repairs or improvements is also an investment in the value of your home should you choose to sell someday.
  5. There are several tax deductions you may be eligible for if you own your home. This can reduce your overall tax burden.
  6. Buying a home usually opens up more choices of where you live such as in the countryside instead of the city.

Cons

  1. When you own your own home you usually need to sell it before moving to a new one.
  2. If the housing market is soft you may not be able to sell your home for as much as you would like. In a worst-case scenario, you could end up owing more than your home is worth.
  3. When you sell your home there are costs associated with the sale you have to pay.
  4. The overall cost of homeownership is more than renting.
  5. If you’re home is mortgaged you have to pay interest on your loan.
  6. You’re financially responsible for repairs and maintenance.
  7. Owning a home is a bigger time commitment because of the maintenance.
  8. You have to pay for homeowner’s insurance.

Three Questions to Ask

After considering all the pros and cons of renting vs. selling you need to establish which option is best for your lifestyle.

How long do you plan to stay in the home? If your job moves you around every year or so, you might want to rent.

How much can you realistically spend each month? If you have a down payment and can afford the general maintenance of a home, buying may be right for you.

Do you have the time to maintain a home? If you don’t want to spend spare time mowing the lawn and raking leaves, you might want to rent.

No one can make the decision to buy or rent for you. It’s a personal choice that requires serious consideration.