How do you decide between renting and owning your home?

How do you decide between renting and owning your home?

It’s easy to ask the question, “Should anyone rent?” in these times of rent payment disputes and stimulus checks.

This debate about renting versus owning isn’t new. Unfortunately, there aren’t any clear winners. It comes down to personal decision making and is based on your circumstances, lifestyle and goals with property ownership. There are some things you can do to help you decide if renting or buying is right for your needs.

The Case for Renting

Renting is the most obvious reason for buying a home. A home loan is not the best option, especially for those who are dealing with increasing student debt.

Renting is a better option than buying if you have other reasons. Consider your lifestyle and career path. Renting might be better for you if you are in a situation that requires you to move a lot or you are uncertain where you will be living in the next five or ten years. After your lease ends, you can move wherever you want, without restrictions. However, when you pay off a house, you will likely be held accountable for a while.

Renting is also a good option because your monthly living expenses are set in stone. While rent increases can be very worrying and real, you will not normally have to pay for repairs, renovations or maintenance fees. Although the problems might not be resolved as quickly as you would like, the owner usually pays the rent. These unexpected fees, which can sometimes be “hidden”, can cause financial problems and throw off your monthly budget.

Renting is less risky than buying. Although buying a house is a great way to build wealth, your actual wealth is dependent on inflation and the value of your home, which is not always guaranteed. Although renting does not directly contribute to an investment and will not grow your wealth, it allows you to save money (compared to paying more for a home). Although increased wealth in this instance is dependent on external factors as well, it doesn’t tie up your wealth in a property that may lose value. Therefore, putting money into investment is completely optional.

The Case for Buying

If you don’t plan to stay for very long, it can be difficult to decide whether buying is the best option. However, if you’re thinking of staying in one place for at least ten years, there are some great benefits to buying.

Although buying can help increase your wealth, it is not cheap. In most cases, purchasing will cost you more than renting. This is due to the homeownership fees, which are added on top of your mortgage payment and other payments. After you have paid all the ownership fees, however you will feel the immense relief of not having to answer to anyone (except maybe a homeowner’s association). There is no way that anyone will suddenly raise your rent. And even though unexpected fees are now in your control, maintenance and repairs happen on your schedule, not when the apartment owner has the time.

This and most other reasons to purchase a home are less financial than they seem. Owning a home gives you a sense of pride and freedom. A house is a great place to live for the long-term. You can also pass it on as a valuable asset. Although it won’t cost you more than renting, buying a house can provide financial relief to the person you give it to.

Which is better for you?

This is a very personal question. If you are able to afford both options, the most important question is: How long do you plan on staying? Renting is a great option if you are planning on moving frequently or regularly.

However, if you’re committed to staying put, consider what owning your home would mean to you. Renting and investing the money you save is a better choice if wealth accumulation is your goal. This is especially true if you don’t want to stay 35+ years in an area where you can guarantee that your home will increase in value. However, if you want the independence and pride of ownership and the security of passing property on, buying may be the best option.

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