- Flexibility: A person renting has much more flexibility when it comes to moving out of a situation, leases can be altered with landlord approval, and most of them are shorter term to begin with. If you are picky about your neighborhood, if your work forces you to move, or if you still want to see a lot of the world, this might be the option for you.
- Saving Money to Invest: From maintenance to taxes, owning a home can be a money-pit. If you are in a part of your life where you need to be saving money for an expense (hobby, vacation etc.), renting could be the way to go.
- No Maintenance Responsibility: Renting means that the landlord pays for the repairs. This is another one of the money-savings bonuses of renting.
- No Equity: Buying a home is an investment, and if everything goes as planned, your home will appreciate in value. As a renter, you will be paying rent month in and month out, and you’ll never see a return on that money you put in.
- Lack of Control: Depending on your lease, you only have so much control over your home. Renovations, remodels, even things as simple as paint color and pet ownership are up to your landlord.
- The Dreaded Rent Hike: Each time a lease ends, the landlord has the option to increase the rent, and more often than not, they do. As long as the value of the property increases, so will your rent, and as a renter, that is a value that only you are paying for.
- Equity: Unlike the renter, if everything goes according to plan, you’ll get out more than you put in with your home.
- Self-Determination: As the homeowner, you have the final say when it comes to your property. Want to knock down a wall? Install a different type of stove? Put in a pool? It’s all up to you. Additionally, no one will ever raise your rent, and you will be able to plan your finances for years in advance.
- Costs: Owning a home comes with a lot of costs. Maintenance, insurance, taxes, and mortgage rates are all big considerations when thinking of buying a home. Experts recommend setting $3,300 aside annually for home maintenance. Also, mortgage rates can fluctuate due to taxes, likely between 1%-3% of the home’s value.
- Decrease in Value: There are no guarantees in homeownership.
Buying vs. Renting Factors to Consider
- The Future: What do your plans for family and career look like? Is owning a home central to that, or an afterthought? If homeownership is a high priority part of your plans, go for it, but if buying a home is third or fourth on your list, you should probably wait.
- Finances: Do you have savings? Equity? Credit? If not, are you prepared to do the work to fix your credit and/or apply for assistance in putting down an initial payment? In order to qualify for most home loans, your debts should not exceed 28% of your income.
- Responsibility: Buying a home can be a full-time job, and owning a home can be that and then some. Do you have the time and commitment to make this change in your life? Owning a home is not right for everyone. If this kind of investment in time and money is not part of your plans, it’s better to know now than later.
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