Buying a home is probably going to be one of the biggest financial decisions of your life, so it’s definitely something you’re going to put a lot of time & thought into before taking the plunge. But how do you know when it’s the right time to take the leap and purchase a place of your own? Well, we can’t make that decision for you…but we can dive into some of the pros of both renting & buying. Perhaps seeing everything listed out will help as you navigate this big decision.
PROS OF RENTING
- Less Maintenance: Leaky faucet? Broken washing machine? A quick call to your landlord will get that fix in no time at all. Plus, you won’t have to pay a dime to get things back up and running.
- Lots of Flexibility: Renting is a great way to try out different neighborhoods in your city. You can spend a year here and there, with no long-term time commitment. This is a wonderful way to find an area that really fits well with your personality and lifestyle.
- Big Life Changes: If you’re going through any big life changes (changing jobs, moving in with a boyfriend, etc.) then it’s a heck of a lot easier to rent than to buy. Buying can tie you down to a specific area or place, and you may not have the same freedom to pick up and move like a renter.
- Less Work Upfront: Yes, you will have to put in some time, effort, and money into finding a nice place to rent. But, it’s not quite as much work as it is to get a loan, find a realtor, and purchase a home.
- Lower Insurance Costs: Renter’s insurance usually comes at a very low price, while homeowner’s insurance comes with a hefty price tag.
PROS OF BUYING
- Freedom to Customize & Personalize: When you own, you don’t have to ask permission to paint the walls, create nail holes, or swap out a light fixture. Instead the entire place is your blank canvas. Your walls can be sunshine yellow or bright blue…it’s all up to you now!
- Tax Deductions: You can deduct property taxes, closing costs, as well as mortgage rates if you own a home. Thanks Uncle Sam!
- Build Equity: “Equity” may sound like a confusing word, but it’s actually a really wonderful word! Your equity in your home is the amount of money you can sell it for minus what you still owe on it. Thus, as the months and years go by, your equity grows! So when you rent, you don’t own anything when you move out. However when you pay a mortgage, you increase your degree of ownership in your home with every payment.
- More Stability: When you’re a renter, you can’t control where you’ll be living past your lease. As a homeowner (as long as you keep paying your mortgage & taxes!), you have the peace of mind to stay put and enjoy your long-term home.
- Stable Housing Payments: As a renter, your monthly payments can go up at the end of your lease. But if you have a fixed-rate mortgage your payments will stay the same throughout the duration of the loan.
But let’s be honest, even after evaluating all of these benefits it’s still going to come down to one big thing…MONEY. Yep, those dolla’ dolla’ bills. Zillow just published this interesting break-even analysis estimating how many years you need to live in a purchased house before it’s better than renting. You can check out this renting vs. buying calculator for more information on which option makes sense for you financially. This home affordability calculator is another helpful tool too.
Are you a renter or homeowner? What factors went into your decision?