For many people, owning a home is the American Dream and an indicator of financial stability. Most people would agree that it’s better to own your home than to continue paying rent for a place that belongs to someone else. However, there are some situations in which this may not be the best choice. Use the Calculator below to see whether it is better to rent or buy a home in your specific case.
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Here’s a quick look at the advantages and disadvantages of both options:
Renting is what most people do when they first move out on their own. Although your payments will not build you any equity in the property, you’ll have more flexibility and freedom.
1) Maintenance is a phone call away. If something breaks down, you won’t have to pay for it or do it yourself.
2) Moving is much easier, even if you’re on a lease. Opportunities come and go, and pursuing a career in another city is much easier when you don’t have to sell your house.
3) If your house goes down in value, you won’t be stuck with a depreciating asset.
4) Renting will cost you less cash up-front than buying.
1) No matter how much the home appreciates, you’ll never get any of the equity.
2) Your ability to personalize the home will be limited to what the owner allows.
3) You won’t benefit from any tax breaks associated with the home.
4) Your monthly payment can go up when you sign a new lease.
The decision to buy a house is a big one that should involve the input of every member of the household.
1) If the house goes up in value, the equity will be yours. You’ll also build equity as you pay down the mortgage.
2) Your monthly payments should remain the same, provided you’re on a fixed-rate mortgage.
3) You can deduct your mortgage payments and property taxes, which will help offset the costs associated with home ownership.
4) You can use your home as an investment vehicle by renting it out.
5) You can redecorate your home as much as you like, provided you’re not subject to the rules of a homeowner’s association.
1) You will be responsible for the costs of your own maintenance.
2) You may not be able to sell your home quickly, if you have to move.
3) You’ll have to pay property taxes, which may occasionally go up.
4) Your home’s value could decrease.
5) Due to the down payment and closing costs, you’ll have to come up with a considerable amount of money.
6) You’ll be required to purchase homeowner’s insurance.
As you can see, owning a home is not the best choice for everyone and it’s best to discuss the pros and cons as a family. Make sure everyone understands the costs and be sure to discuss how long you all expect to live there, since anyone’s future plans can affect the outcome. Finally, you’ll have to determine how prepared you are for home ownership with regard to your credit score, income and any other outstanding debts. If there’s any doubt, it’s better to continue renting until more favorable conditions arise.