Rent vs. Own
- Jul 21, 2015
- 2 min read
This is a very common debate, about whether it is better to rent or to own. But its not a matter of whats better, its about what meets your needs and lifestyle. There are pros and cons for both, and they can vary depending on where you live.
Renting
Pros:
1) You don't have to pay for maintenance. The Landlord typically handles all repairs, depending on the language in your Lease Agreement. Although renting is typically more expensive in most areas, you won't have that added surprise cost of having to replace the roof, furnace, etc.
2) You're only tied to the property for typically just 1 year. If you're looking for more freedom when it comes to relocating, renting is the way to go. Whether your job constantly relocates you, you're new to a city and are unsure of what neighborhood you'd like to live in, or you just find yourself constantly moving - renting allows you to do that with no strings attached.
3) If you have bad credit, renting allows you time to build your credit up by having a history of on-time payments.
Cons:
1) In most regions throughout the U.S., rent prices are historically high, making purchasing a home much more affordable. Interest rates are still very low & there are loans which don't require a large down payment, making home ownership more accessible to more people.
2) You can't make alterations to your home without permission. Depending on your Lease Agreement, you may not even be allowed to use a hammer and nail to hang up pictures. You are very limited in how you can personalize your space.
3) No equity. When you pay your rent, that either pays your Landlord's mortgage or it boosts their equity. If you intend on living where you are for longer than 5 years, it makes more financial sense to purchase a home.
Owning
Pros:
1) Your monthly mortgage payment will likely be less than rent. Interest rates are very low and there are many programs which allow a small down payment to purchase a home.
2) You can personalize your space. You have control over everything that happens in your home. If you want pictures on every wall or you want to paint your walls a different color every month, you can do it and don't have to ask permission.
3) Tax deductions & equity. You can write off your mortgage interest and property taxes, which is something you can't do when you rent. Every time you make your monthly mortgage payment, you are increasing your equity.
Cons:
1) Maintenance and repairs can be costly. When something breaks, you not only have to make the call to a repairman, but you also have to pay the bill.
2) Moving is a more complex process when you own. When you rent, if you suddenly have to move, there are options you can work out with your Landlord. When you own there are several more steps including hiring a real estate agent to help you sell the house.
Where you live is a big decision, and its important to consider all factors before deciding on whats best for you.
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