Buying vs. Renting

Buying a home is long- term goal for many. It is something that people hope and work for but is also a huge financial decision that can take time and consideration. There are different reasons for wanting to buy a house- to plant roots, customize, build equity, etc., as well as reasons to keep renting- flexibility, uncertainty about the future, and, financial instability. Consider the different reasons for buying vs. renting to understand what is the best decision for you.

Buying: you should buy a home if you…

• Plan to live in the area long term (think 2+ years)

• Want the ability to customize your home

• Want to receive tax benefits

• Are trying to build equity

• Have a steady income and savings

The Pros of Buying:

Personalization: Find the perfect home or renovate to make it perfect. When you buy a house, you are in full control of what you want the space to look and feel like. Upgrades and renovations can also add value to your home.

Taxes: When you own a home, you will have to pay a mortgage and taxes. A portion of these payments is tax-deductible, helping you to pay fewer taxes.

Ownership: If you have a mortgage, each payment gets you one step closer to fully owning the home.

The Pros of Renting:

Flexibility: If you are unsure of where you want to be or of your timeline, renting gives you the flexibility and freedom to move after a certain period of time with lower hassle.

Landlord: When renting you have an owner or a landlord who oversees everything. This includes being responsible for making repairs, paying taxes, and managing the property.

The Cons of Buying:

Expenses: As a homeowner, you are responsible for certain things including insurance, taxes, utilities, repairs, and any unexpected damages.

Maintenance: There is no landlord to call when something breaks. You are responsible for the upkeep and management of your home.

The Cons of renting:

Rate increases: Similarly to how prices of homes can increase, rental rates are subject to the market and demand. However, instead of locking in one rate for a long-term period, you can be subject to a rate increase every year.

Limitations: You do not have full control over your rental and its appearance. Everything will have to get approved by the owner and is at their discretion.

Lack of Financial Incentives: When you pay your rent, it goes to the use of that property for that period of time. The money will not be used for tax incentives or to build equity and you will not have any long-term stake in the rental once payments are made.

Trying to decide whether to buy or rent is a big decision. There can be a lot of uncertainty when answering these questions and figuring out if now is the right time. If you are still unsure and want to further examine buying and renting, reach out to me to help you navigate your options.