Weighing the Decision to Rent or Buy

With the current housing market tempting potential homeowners to buy, many people question if they should rent or buy their next home. Before making this decision, consider several key differences between renting and buying.

Renters are not tied to one location, neighborhood or job. They enjoy the freedom to move to a different home across the street or around the world after their monthly or annual lease expires. With a 15 to 30 year mortgage, homeowners purchase a long-term commitment. When buying a home, consumers consider more than the condition of the home or the price. They evaluate the school district, tax rate and neighbors as they invest in their future.

Renters typically pay less in home-related expenses. Renters may see a rent increase to cover annual tax increases but generally do not pay any taxes on their home. Homeowners pay real estate, property and school taxes. Tenants purchase renter insurance to insure their possessions. A homeowner must pay to insure their home, property and possessions.

Rental property does not build equity for renters. Homeowners build equity, which they can later access for cash. Renters may lament the fact that they cannot pound nails into the wall let alone build an addition or own a pet. Homeowners hold the power to make structural or decorative changes to their home at their discretion.

Repairs remain a more intimidating and expensive issue for homeowners. A tenant calls the property owner to repair the furnace on New Year’s Eve. Homeowners bear the repair responsibilities ranging from loose drawer hardware to major plumbing issues. With the satisfaction of do-it-yourself home repair comes greater out-of-pocket expense for home maintenance and upkeep.

Upon moving, a renter’s responsibility includes providing the property owner with a 30 or 60-day notice in addition to returning the home to like-new condition in order to retrieve the security deposit. Homeowners face greater challenges when they choose to move. They bear the responsibility to perform numerous improvements to the home and property in addition to finding a buyer for their home before they can financially afford to move.

The American Dream holds appeal for many potential homeowners. Before jumping into homeownership, compare the benefits and disadvantages of renting and buying. Make an informed decision before moving into a new house that will become home.