Rent vs. buy

Which is right for you?

Renting vs. buying a home is a big decision, and there are pros and cons to each option. In recent years, a higher percentage of U.S. households were renting than at any point since 1965.

Pros of Renting:

• Fewer upfront costs and paperwork

• Freedom to be more mobile

• Not responsible for maintenance, repairs

• No need to worry about falling home values

• Build credit

• No property tax bills

Pros of buying:

• May build equity and credit

• No landlord to answer to

• More stability (especially with schools)

• Possible tax benefits

• Freedom to make improvements or to upgrade the home

Cons of renting:

• Landlord can raise rent or sell the property

• Choices may be limited depending on vacancies

• Might have to move multiple times

• Doesn’t build equity

• No tax benefits

Cons of buying:

• Requires substantial money, paperwork upfront

• Could lose money if home values decline

• Extra expenses beyond mortgage payments

• Responsible for repairs, remodeling

Is buying cheaper than renting?

There are different costs associated with renting vs. buying, and they depend heavily on where you live and the local housing market. Using a rent vs. buy calculator can help you break down some of these expenses for you.

Most rental properties require a security deposit which protects the landlord against damage caused by the renter. You’ll usually put down the first and last month’s rent payments when you sign a lease agreement. Generally, these will add up to be three times the monthly rent. Another fee made by tenants are background checks. In a hot rental market, you may expect to do background checks for multiple properties. When evaluating a lease agreement, ask if your monthly rent includes utilities such as water, electric, gas, cable, or internet.

For homebuyers, one of the biggest costs of homeownership is your monthly mortgage payment, which includes the loan’s principal and interest. Hopefully, this will also include property taxes and homeowner’s insurance. Your payments can go up or down over time if your loan is variable-rate or your property taxes or homeowner’s insurance premiums change.

Having a sizeable down payment — anywhere from 3 - 20 % of the home’s purchase price — is expected. If you put less than 20% down, your lender will typically require you to purchase private mortgage insurance, or PMI.

During the home-buying process, the buyer will pay for a home inspection and for any quotes for repairs needed from contractors. They will also put down at least 1% of the sales price for earnest money deposits. This is held in escrow and will apply to the closing costs of the property/sale. (Meaning, you don’t lose the deposit – unless you break the contract.)

If you’re purchasing a property in a homeowner’s association, or HOA, you’ll also factor in monthly HOA dues, which can cover services like landscaping, exterior maintenance, cable, internet and/or community amenities.

So, as you can see. Both have pro’s and con’s that are favorable to some, while not so favorable to others. My personal philosophy, buying is better than renting in the long run. I’ve used renting as a stepping stone to help position myself better to be able to buy. Don’t get me wrong. I’ve made mistakes along the way. Big time. But having a place to call mine and a piece of mind having something to leave my beneficiaries if and when I should move on from this world. Build a legacy, no matter how small or big.

Either way, I can help you find your Home Sweet Home.