The Pros and Cons of Buying vs Renting

Home ownership has long been synonymous with the American Dream. Think Saturday’s lawn mowing ritual, room-by-room renovations to make a house your own, block parties and trick-or-treating, Christmas lights and 4th of July BBQs.

“Home” carries deeply emotional connections. It’s your haven where you rejuvenate after a long day at work. It’s where you raise your children, celebrate life’s milestones, and grow old together.

Home ownership also has its financial benefits, such as building equity and garnering tax deductions.

Renting is appealing as well. So which option is best for you? Read on to find out.

Buying: More than Just the Right Price

Buying a home is not just a financial decision. It’s also a lifestyle decision. If you are trying to decide if home ownership is right for you, ask yourself these three questions:

Do I have a down payment saved that is appropriate for my needs?
Is the home I am looking at likely to appreciate in value?
Will I be in it for five years or more?

If the answer is “yes” to all the above, purchasing a home is a viable option.

First, while there are many, many different down payment options on the market, especially to first time home buyers, the more you are able to put down, the better you are financially in the long run as higher down payments translate to lower interest rates and waived PMI.

Second, a home is an investment. It is wise to consider housing trends in your intended neighborhood. Buying in a glutted market or in an area where housing historically depreciates rather than appreciates is a gamble. You don’t want to lose money when it comes time to sell.

Third, the longer you remain in your home, the more likely you will recoup upfront purchasing costs, such as inspection fees, closing costs, commissions, and legal fees. So, if your job requires you to relocate frequently, being tied to a home may not be in your best interest.

Pros and Cons

Still not certain? A good pros and cons list helps you get down to brass tacks.

RENTING

Pros:

Flexibility: Saturdays are for golf, not yard work!
Predictable monthly expenses: Rent and utilities are static, plus, no property taxes.
Convenience: Someone else is responsible for repairs.

Cons:

No tax benefits: You can’t deduct rent like you can a mortgage.
No equity: Once you pay rent, the money is gone. You aren’t working to ownership.
More transient lifestyle: Renters move more than homeowners.
Someone else in the driver seat: You are at the mercy of your landlord for rent hikes and building sales.

BUYING

Pros:

Tax benefits: Homeowners enjoy a tax benefit that renters do not.
Equity: With each payment you make, you are one step closer to full ownership.
Sense of community: You are putting down roots.
Ownership: You are free to renovate and update you please.
Investment: You can cash in on your home’s appreciation.

Cons:

Responsibility: Only you are responsible for upkeep.
Expenses: While some expenses are static, such as mortgage and utilities (if you are on a level payment plan), the unknown – a new roof or HVAC system – will happen.
Financial: If you buy in an area with uncertain home values or that is overbuilt, your home’s value could depreciate.
More difficult to relocate: Getting out of a lease is easier than selling a home if you need to move quickly or unexpectedly.

Check out our mortgage calculator to help determine if the time is right to buy. With current interest rates so low, you may be surprised to discover that it is. We have over 30 collective years of mortgage experience and are always happy to guide you through the process of deciding whether or not home ownership is right for you at this time. We want you to Experience Your Good Life, so contact us today!

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.