|Should I Buy or Rent My Home?
Here are some pros and cons to help you make a plan.
Buying a home
If you are in the market for a new home, buying is the best way to build equity (i.e. actual ownership of a physical item of value) with each monthly payment. Your monthly mortgage payment will go towards principal, interest, taxes, and insurance. After your 15- or 30- year mortgage is up, you will own the home free and clear.
Buying a home is a big investment, probably one of the biggest you will ever make. So you should do your research and understand your budget before you get too far into your search. Keep in mind additional expenses like utilities, upkeep of your home, and repairs that may be needed. This may mean that you purchase a smaller, more affordable home but I think that the equity you start building can be worth downsizing a little.
Renting a home
Renting is easier, on the renter and often the wallet as well. Toilet broken? Call the landlord or property manager. Heat goes out during a holiday weekend? The landlord or property manager will handle that, too. Home upkeep is much easier when you are renting. But the home is not yours and you are sometimes stuck with a layout or finishes that you can’t change. Some landlords will make upgrades but they are certainly not obligated to do so. If they do, you will almost always have to pay more in rent.
The financial downside of renting is that every monthly rent payment goes to the landlord, who is the one actually maintaining ownership of the property. If you rent the same home for 30 years, you will not own the home at the end of that period, even though you have been paying every month to live there.
Each situation is unique—remember that your needs are not the same as your neighbor’s, your friend’s, or your in-laws’. Have a conversation with your loan officer about what you are looking for, your budget, and your concerns. Having all of the information laid out can help you make the best decision on whether to buy or rent.