Rent or Buy: Pros & Cons
The current real estate market housing prices have increased, and in most areas rental costs have done the same. In some areas, it is cheaper to rent than to buy, but not in all markets. There are many other factors to consider when you’re weighing your options on buy vs. rent a home.
In most popular cities and suburbs, home prices are climbing fast, which can make renting look like a better alternative. Rental prices can also climb in the same areas, if the demand exists. This makes the cost of renting vs. buying quite similar.
Renting a house or apartment
Renting a home or apartment is desirable for people who are constantly on the move for work. They have more of a mobile lifestyle, and purchasing a home that they will hardly live in isn’t always desirable. Another advantage to renting is that you don’t have to deal with the responsibility or costs when it comes to dealing with apartment repairs. These repairs, and costs, fall on the landlord. You’re not on the hook for unexpected financial commitments, like fixing the dishwasher or sprinkler system.
The monthly cost of renting can also be lower than a mortgage payment. Typically, the cost of owning vs. renting eventually becomes cheaper, whereas the cost of renting continues to stay the same and has the potential to go up, depending on rent trends.
In the long term, whether or not your real estate market is in the up and up or not, buying can save you money. Over time, the money that you’re putting into your own home is less than a renter is investing. Another point to consider, the renter isn’t actually investing any money. When you’re putting money into a mortgage payment, you’re putting equity into something, into your home. You’re adding value to your home, value that you someday could get back. It’s essentially the same as adding something on to your house that would make it more appealing to future buyers. If you added a pool, it would entice more future buyers, and therefore would increase the value of your home.
Your home can also increase in value due to the local real estate market. When you buy it, it may be worth a set sum, but then after years of market change it could be worth significantly more. In some current real estate markets, home prices have doubled in the last four years, which is great for home owners but not as great for those seeking to purchase a home. Many home owners and property owners also have plenty of tax benefits to consider when purchasing a home. You can deduct a mortgage from your income tax bills, amongst other options.
When you own your own home, you also don’t have to worry about rent increases coming out of nowhere. Your monthly mortgage payment will stay the same, unless you refinance or choose to pay more than the agreed upon amount every month. Also, once your mortgage is paid off, your monthly housing costs drop significantly.
Renting and buying each have their own set of pros and cons. It depends on what you’re looking for a property and commitment. If you’re seeking something more long term, the advantages of buying outweigh renting. Over time, the financial benefits to owning a home can trump renting as well.