Home Buying Versus Renting

It can be a difficult decision, but it's one that has to be made at some point in your life. Renting a home has benefits of its own. For example, if you don't like your location, you can easily move to another one once your lease has ended. There are also drawbacks to renting that lead many people to buy their own home. When you rent, you are paying to live in a space that will never be yours. Let's consider the aspects of home buying versus renting a home.

Home Buying

The true cost of home buying, is more than the down payment and mortgage. There's also private mortgage insurance (if your down payment was less than 20% of the home price), homeowner's insurance, property taxes, and maintenance. These costs can increase your monthly payment by 40%.

In home buying, each payment you make on your mortgage brings you one step closer to home ownership. As you pay on your mortgage, you increase the equity you have in your home. This equity can be prove to be beneficial if you want to sell your home or use it to borrow money.

It's a pretty well-known fact that mortgage interest payments and some property taxes are tax deductible. For many, this is a very good reason for home buying. Not only are you investing your money in a valuable asset, you get a break from the federal government for doing so.

When home buying, home and property maintenance is your responsibility. You will either have to maintain the home yourself or pay someone to do it. In either case, it is an additional concern that you must take into account.

Renting

Financially speaking, maintenance is not very much a concern. It is the landlord's responsibility to fix the plumbing if something breaks down.

Moving is easier when you rent. Of course, this depends on the amount of belongings you have, but generally speaking, people who rent tend to have less “stuff” than people who own.

Extra fees are usually non-existent. While some landlords require tenants to have renter's insurance, the premiums are much lower than homeowner's insurance. When you rent, all you have to worry about is the rent and utilities.

You could rent a home for thirty years and, at the end of that time, not have accumulated any equity in the property. When, if you had bought rather than rented, in thirty years, you would have a pretty sizable asset.

Rent increases are inevitable. You can expect to continue to pay higher rent each year. The only thing you can do about a rent increase is move to a property that has a lower rent.

Both home buying and renting a home have their advantages and disadvantages. When you are making a decision about home buying, it is wise to consider both the good and bad of either choice. Ultimately, you have to decide if the benefits of your decision of home buying versus renting outweigh the associated costs, whether it's a matter of finance or convenience.