The Pros and Cons of Renting vs. Buying a Home
For many, the thought of homeownership is a lifelong goal. And after renting for a period of time, you may be wondering if the time has come to purchase a home for yourself. Although the idea can be appealing, financial stability and a steady job can be hard to pin down for the foreseeable future — and that alone can impact your odds of securing a mortgage.
In the end, there are advantages and disadvantages to each option and the buying a house vs. renting pros and cons can actually shift depending on where you live, among other variables. So, if you’re curious about understanding whether renting or buying is the better option for you, take a look at our tips to help you make this important decision.
Buying a House Pros and Cons
Because homeownership — and the challenges it requires of you — are best understood with a little experience, many first-time home buyers may not be quite certain what it means to own a home. There can be downsides. For instance, out-of-pocket expenses can arise and leave you with a hefty bill if a roof needs replacement. The pros and cons of buying a house are many, but chief among the questions you’ll need to consider is: which option makes the most financial sense for you?
Advantages of owning a home
There are few things in life that compare to the day you finally buy a home. And when the conditions are right, you may find that homeownership has many rewards. Here are a few examples of reasons to consider buying a home:
- You’ll likely be building home equity with every mortgage payment.
- Steady monthly fixed rate mortgage costs can help you to predict expenses in the long-term.
- You may be able to take advantage of a mortgage interest tax deduction and other tax benefits.
- Owning a home affords you more privacy than renting an apartment.
- You’ll have the ability to decorate and alter the home to your tastes.
- You can own pets without having to worry about landlord rules and added fees.
- Having a backyard space can help you to enjoy the outdoors.
- Home value may increase over time if the market you buy in is getting more valuable over time.
Disadvantages of owning a home
If you’re not familiar with what it takes to own a home, you may be surprised with all the hidden costs you’ll encounter as you head to the closing table to lock in the deal. Here are a few reasons to think twice about owning a home:
- Costs for home maintenance and repairs can impact savings quickly.
- Moving into a home can be costly.
- A longer commitment will be required vs. renting.
- Mortgage payments can be higher than rental payments.
- Property taxes will cost you extra — over and above the expense of your mortgage.
- Money needed up front to buy the home can be hard to pull together.
Renting Pros and Cons
If you’ve been renting for some time, you may be used to paying the rent and having a landlord manage most of the issues that arise. If the dishwasher breaks, the landlord will likely be around to check it out and get it serviced if needed. The benefits of renting allow you a more hands-off approach to living, with most expenses covered by your landlord. There are other positives — and negatives, too.
Advantages of renting
When reviewing the pros and cons of renting a house, be sure to weigh out the expenses equally. You may find renting is a more economical way to go. Here are other key benefits of renting:
- No responsibility for repairs and maintenance.
- Rent is usually cheaper than a mortgage payment.
- Easy to move to different locations.
- Real estate taxes and other municipal expenses are covered by the landlord.
- Rental upfront costs are less, compared to home-buying.
- Utility bills may be included in rent payment.
Disadvantages of renting
Sometimes renting can be the wrong answer. Landlords may increase the rent, and that can sometimes force you into an unplanned move. With only weeks to apply for a new rental, you’ll have to come up with a security deposit for a new place and arrange for moving. And if you’ve damaged the rental you’re currently in, you’ll need to pay for repairs or do the work yourself in that time. Here are a few disadvantages of renting a home or apartment:
- Amenities can be old or out-of-date.
- You won’t be building equity in a rental.
- You may need to find a roommate or move if the rent increases.
- You’re limited in the ways you can upgrade the space.
- Rent will increase annually, in most cases.
- Renting offers less stability than owning.
Is Owning a Home Right for You?
If you feel the time is right to start shopping for a home, there’s a lot to get organized. From managing your finances to securing a mortgage that fits your budget, you’ll need to bring your A-game.
When buying a home, it's important to have a homeowners insurance policy that helps to protect everything you've worked so hard for. You'll find real comfort knowing that your home's insured carefully.