Should you buy or rent? As much as I wish I had a straightforward answer for you, I donโt. Instead, I hope to guide your analysis in order to make things just a bit more clear for you. Letโs run down the major benefits of each.
Renting
Most often, those that choose to rent want or need flexibility based on one or more of the following factors:
Shorter-Term Commitment
If youโre the type of person who doesnโt know where theyโll be 6 days from now, much less 30 years from now (average mortgage length), renting may be right for you. While the typical commitment term for a rental property is one year, landlords sometimes rent for shorter periods of time. This is a major decision factor for those who may soon be moving due to a change in family, school, work, or personal relationships.
Appreciating a regular change of scenery is another consideration. This might include a wish to travel often, or a want to try different property setups such as houses, apartments, high or low volume buildings, city or beachside locations.
Lower-Maintenance Lifestyle
One of the greatest things about renting is that maintenance, for the most part, becomes someone elseโs responsibility. Routine maintenance tasks like cleaning a pool or gym, mowing a lawn, and more are taken care of by others. When repairs are needed, whether it’s plumbing, AC, washing machine, roof, or an appliance, you donโt have to worry about the cost or the time it takes to fix them.
This lifestyle appeals to those who lead busy lives. Whether youโre a full-time graduate student, a busy executive, a single parent, or simply someone who values their free time, renting allows you to focus on other priorities rather than dealing with household maintenance tasks.
Lower Financial Risk
When you rent, you pay a premium (in the form of a rental fee that exceeds the relative amount of value you receive from the property), but the rent you pay also guarantees that you can never lose more than the amounts you have contracted for. In other words, your wealth is not on the line when the house or apartment youโre renting lowers in value.
This is a significant consideration for individuals who plan to reside in their next property for less than three years, which is the national average break-even point for owning a house in a healthy market.
For those uncomfortable with the financial commitments associated with owning a house, they may compare fixed-cost rental payments with the tax, insurance, and maintenance expenses that often fluctuate with homeownership.
Additionally, individuals with a fluctuating income that would make a larger monthly commitment unmanageable might find renting more suitable.
For those who lack confidence in the idea of homeownership as a financial asset and prioritize investing in other areas, renting provides flexibility and freedom from long-term financial commitments.
Buying
There are many reasons why someone buys instead of rents, but most have to do with having the will (and money) to take on more risk in order to gain the following rewards:
Customization and Peace of Mind
Buying a house often instills a feeling of stability, which includes freedom from most of the rules and restrictions that come along with renting. Also, buyers have much more freedom to renovate and adjust their living space to suit their everyday lives and make their time spent at home more enjoyable.
Long Term Financial Rewards
If youโre the sort of person who has a fairly good idea of where youโll be for the next several years, buying may be right for you. Buying a home may afford you the following financial benefits:
Taking Advantage of Attractive Mortgage Rates or Home Prices: The average mortgage interest rate in the United States over the last 50 years has been around 10%. Recent times have held lower rates, but the future is uncertain, and we may soon return to higher average rates. Higher rates mean less access to more expensive homes for the average person. Buying a home now may reduce the risk of being locked out of your dream home.
Home value appreciation is another potential gain with buying a home. In very strong markets, homeowners may gain equity in their home very quickly. Home values fluctuate, however, and they could always decrease in value as well.
Savings
The most important asset class for the majority of Americans is their primary home. Homes are relatively expensive assets, and homeowners tend to accumulate much of or all of the equity interest in their homes. Effectively, homeownerโs equity often becomes savings from which to draw on in the future.
Tax Benefits
Federal, state and local governments often incentivize and support homebuyers through tax deductions.
Understanding these pros and cons, hopefully you are more ready than ever to make the buy vs. rent decision. Happy shopping!
Should You Rent Or Buy A House?
Buying a house has more benefits than renting. Having that in mind, you should buy However, the definitive answer really depends on your life needs. There are some circumstances in which renting is more affordable than buying.
