Renting vs. Buying

Renting vs. Owning

Both owning and renting can have their advantages. The better choice for you depends on your circumstances. Here are some of the things to keep in mind when you weigh the benefits of renting against the benefits of owning, both from a financial and a personal perspective.

 

​Financial Considerations

Knowing where homeownership fits into your larger financial plan is important. Ask yourself: Would I need to make changes in my budget to buy a home? Would it mean stretching to my financial limits? Would owning allow me to still maintain my other savings goals (such as contribution to my retirement fund) and stay prepared for potential costly home emergencies  such as a new roof or heating/cooling system?

 

 

 

Renting has both advantages and disadvantages. For example, renting may provide you with more leftover cash each month, if your rent is less than a mortgage payment. On the other hand, renters are often subjected to rent increases over time. And when it comes to repairs, renters call the landlord to fix the leaky faucet. If you’re the homeowner, you’ll call a plumber–and pay the bill.

Owning a home may provide you with income tax benefits. Owning a home also offers you the chance to increase your personal wealth as you pay off the principal on your loan over time and build what is known as equity.  Of course, home values can rise or fall over time, so building equity is not guaranteed. And there are significant upfront costs associated with buying, including down payment and closing costs.

 

Personal Preferences

Owning a home is a financial commitment that requires you to plan ahead, reflecting on where your life is headed and what you want to accomplish along the way. Ask yourself: What additional financial goals would I like to accomplish as I make payments on a home loan? What’s more important to me: the opportunity to build equity over time or to perhaps have more cash available now?

Renting usually makes it easier to relocate (to pursue a job opportunity, for example). And if your rent is less than a mortgage payment, renting could allow you to contribute more toward specific savings goals, such as retirement, college, future travel, investments or even putting away money for a down payment for a home in the future.

Owning a home could make sense for you if you want to put your monthly living costs toward something you could eventually pay off and own outright. In addition, it also makes sense if you plan to stay in the area and prefer to feel settled in a home that reflects your personal tastes.

Only you can decide whether owning a home fits your life. If buying isn’t the right move for you now but is something you’d like to prepare for in the future, you’ll find great tips on how to do that by contacting a realtor to provide assistance.

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