Rent vs. Buy: Should You Buy Or Rent A Home?

Buying vs RentingThe decision between buying or renting a home can be challenging to make, and it's a choice that requires serious personal reflection. While many people think that renting a home or an apartment is the best decision, there are definite benefits to buying a home. Unless your rent is abnormally low or you plan to relocate within the next few years, we recommend buying a home.

As long as you can afford a home, it's in your best interest to invest in home. Homes act as an asset and can be a very savvy financial investment. But there's more to affording a home than saving 5% for your down payment. If you've never owned a home before, take a look at our First Time Home Buying guide to learn more.

Let's take a look at some of the advantages of renting and buying a home:

Advantages of Renting

Advantages Considerations
Little or no responsibility for maintenance No tax benefits
Easier to move No equity is built up
  No control over rent

Advantages of Buying

Advantages Considerations
Property builds equity Responsible for maintenance
Sense of community, stability & security Responsible for property taxes
Free to change decor and landscaping

Possibility of foreclosure & loss of equity

Not dependent on landlord to maintain

Less mobility

When determining whether it's better for you to rent a home or buy a home, you will need to:

  • Compare the "up front" costs of each:
    Buying: down payment, loan costs
    Renting: deposit, first month rent
  • Compare monthly costs for each:
    Buying: mortgage payment, taxes, insurance, utilities, maintenance
    Rent: monthly rent, utilities, insurance
  • Calculate what you can afford for housing, based on your income and other debts

Buy vs. Rent Comparison

There are a lot of important points to consider when comparing the costs of renting versus buying. On first glance, it may seem like renting is less expensive, but that's usually not the case. Take a look at the savings many home owners will experience:

Year

Rent Payment

Mortgage Payment

Monthly Difference

After Tax Savings

Yearly Difference

After Tax Savings

1

800

1000

-200

-50

-2400

-600

2

840

1000

-160

-10

-1920

-120

3

882

1000

-118

+32

-1416

+384

4

926

1000

-74

+76

-888

+912

5

972

1000

-28

+122

-336

+1464

6

1021

1000

+21

+171

+252

+2052

7

1072

1000

+72

+222

+864

+2664

Ultimately, you will need to figure out whether you can afford owning a home in the first place. Then, consider the conditions of your local real estate market and how long you will be staying in the area. Whenever possible, consider homeownership but ensure the decision you make is right for you.

If you would like more information or have questions regarding homeownership, don't hesitate to contact Lang Premier Properties! We are available to answer any questions you may have regarding the home buying process.