Pay a Mortgage or Pay Rent? Which Is the Smarter Option and How to Tell

by Carson BuckSeptember 6, 2016

Buy vs Rent?

You’ve probably heard it before: “Renting is like throwing money away.” And if you’re feeling like you missed the boat when real estate prices were super low and the market in your area has bounced back in a major way, then hearing those words probably stings a bit.

Naturally, we’re big fans of owning your own home here at, but that doesn’t mean we think it’s always the best course of action. In reality, the best decision for you will depend on a number of variables. Buying a home is often a prudent decision, and it’s hard to deny the appeal of being able to decorate however you want, or to not worry about what the landlord might say. Then again, there are times when it just makes more sense to rent.

So, are you better off buying or renting? Keep reading to find out.

renting or buying a home

Advantages of Buying a Home

First, let’s talk about the benefits of purchasing a home.

For starters, buying locks many of your monthly expenses in at a predictable level. Yes, you’ll have the occasional added expense of installing a new dishwasher or repairing a leaky roof, but you’ll never have to worry about your landlord raising the rent. And if you live in a metro where rents are currently skyrocketing, that’s a comforting thought.

Owing a home also offers substantial tax benefits. Unless you’re the proud owner of a pricey mansion, 100% of your mortgage interest can be deducted from your tax obligation each year. In the early years of your mortgage, when a majority of your monthly payment goes toward interest, that’s a big deal. You can also deduct property taxes and some of your closing costs.

Your home can also add a high degree of stability to your investment portfolio. Generally speaking, home values at least keep pace with inflation, and if you buy in a particularly desirable market, you may see substantial gains.

A home purchase can also provide you with an essential financial buffer for retirement. If you manage to pay your home off before you exit the workforce, then you’ll have a relatively affordable place to live out your golden years. And if you need to downsize or pay for assisted living or medical expenses, you’ll have a tangible asset that can be converted into cash flow if the need arises.

Why Renting May Be a Better Choice for You

With all the advantages of purchasing a home, you’d think that it would be a no-brainer, but there are times when renting is a smarter move.

If you’re a free spirit, or you anticipate a career change in the near future, then you might really appreciate the flexibility that renting offers. Selling a home can be a tedious process, especially if you’re in a slower market. If you rent, you can move as soon as your lease is up.

In many markets, renting tends to be less expensive than buying a similar home. As a renter, you don’t have to shell out for HOA fees, repairs, property taxes, or homeowners insurance.

Buying a home is an investment, and it’s usually a good one. But sinking most of your worldly wealth into a single asset may preclude you from investing elsewhere. When you rent, you’re free to invest your extra monthly cash flow into stocks, bonds, index funds… you name it. And if you ever need to access that money, it’s as simple as logging into your investment account or visiting your investment broker.

renting or buying a home

Tune Out the Hype and Choose What’s Best for You

In the end, the decision to buy or rent is a very personal one.

If you plan to stay in the same place for a long time, and you like the idea of owning your own little piece of your favorite city, then buying might be a better option for you. You won’t have to worry about the rent going up, and you’ll always have a comfy place to call home.

However, renting might be a better option if you’re unsure what the future holds. If you plan on moving in the next few years or are considering a career change that may take you across the country, then you might be better off forgoing the home purchasing process and saving your spare cash for a future down payment. is the place to dream and discover your ideal home! Are you starting to get the itch to look for your first or next home, but don’t know where to start? You’ve come to the right place! Browse our real estate and lifestyle blog for home buying tips, mortgage guides, DIY ideas, interior design, lifestyle topics, general home inspiration, or just some homes fun. We are sure you can scratch that itch and find all the information and tools you need to help in your home search. Want to start looking at available real estate right now? Head to our home page and check out homes for sale or rent listings all over the country. Happy house hunting!

Shares 0
About The Author
Carson Buck
Carson is a real estate agent based out of Phoenix, Arizona. Carson loves data and market research, and how readily available it is in today's world. He is passionate about interpreting these insights to help his clients find and buy their perfect home. Carson got into the real estate industry because he loves the feeling of handing over the keys to a new home to happy clients. In his free time, he works on his backyard bonsai garden and spends time with his wife, Julia.