Should I Rent Or Buy A Home?

"Should I rent or buy a home" is one of the first and most important questions that potential homeowners should answer. There can be compelling arguments for each. Don’t get lost in the details.

What you need to do

The heart of the financial decision to rent versus buy boils down to this question: “will you stay in a home you buy long enough to accrue enough the benefits of purchasing a home to compensate for the extra upfront costs?” The upfront costs of buying can be substantial and include your down payment, other mortgage closing costs and the cost of your time. However, if you buy a home you may reap financial benefits over the long term including:

Since, renting represents a shorter term commitment and generally costs less in upfront costs than buying a house, it may be a better alternative if you are unable to make a long term commitment. For example, if you are concerned about your job security or future earnings, it may be best to rent until your situation stabilizes. Likewise, if there is a high probability that you will have to relocate in the near future then renting may be the best option for you.

Another question you should consider is whether you are ready to assume responsibility for a home as an owner. When you own a home you are free from restrictions imposed by a rental landlord, so you may paint for child's room whatever color you want. However, if the home requires maintenance then that responsibility is yours.

Reasons to Buy

  • Protection against housing cost increases
  • More freedom to personalize property
  • May build equity
  • Tax deductions

Reasons to Rent

  • Lower upfront costs
  • Shorter commitment
  • Less maintenance

Rent vs Buy Calculator

There are so many factors to consider such as home price appreciation, future property tax rates, tax deductions, your earnings on investments, that most people need help in determining whether they should buy or rent. A rent vs buy calculator can help you make the decision.