Buying vs Renting
What Are the Advantages of Owning a Home?
- Greater privacy.
- Homes typically increase in value, build equity, and provide savings for the future.
- Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.
- Potential for rental income.
- Greater creative freedom.
- The interest and property tax portion of your mortgage payment is a tax deduction.
- There’s pride in homeownership, which also closely ties you to your community.
What Are the Disadvantages of Owning a Home?
- Homeownership is a long-term financial commitment.
- You’re responsible for all maintenance on your home. This can include inexpensive repairs like fixing a broken toilet to complex and costly repairs likereplacing a furnace.
- Although mortgage payments are usually fixed, they’re generally higher than rent payments.
- Buying a home requires a down payment, closing costs and moving expenses.
- The value of your house may not increase – especially during the first few years.
What are the Advantages of Renting?
- Renting a home can be cheaper than buying a home. Your payments tend to be lower than a comparable house payment. Also, your rent may cover utility costs (additional savings).
- You have more flexibility when you rent. Most leases are for 12 months. So, if your job requires you to move frequently, renting can be a desirable alternative to owning.
- Your landlord, not you, is responsible for performing nearly all maintenance and repair work on the property.
Financial Disadvantages of Renting
- There is no tax break for renting. You won’t be able to claim any deduction for mortgage interest and property taxes when you file your tax returns.
- Your housing costs aren’t fixed like they are with a fixed-rate mortgage. Your rent will most likely grow from year to year.
- No building of equity.