There’s no doubt that buying a home is a major life decision, but is it right for you? Of course,
There is no one-size-fits-all solution, as both renting and buying come with their own set of advantages and disadvantages. A major factor in anyone’s decision-making process comes down to finances. In most cases, renting seems to be the more affordable option. However, that’s not always the case.
RENTING: Pros & Cons
Pros:
- Mobility/freedom to move around
- Landlord pays for maintenance
- Doesn’t require expensive closing costs. See also What are Closing Costs and Pre-Paids
- No fluctuation in monthly housing expenses
- Allows you to test-drive different living spaces
Cons:
- You don’t build any equity
- Limited ability to customize your living space
- Rent could go up over time
- Landlord might sell or decide to stop renting
- Limited sense of home stability/permanence
BUYING: Pros and Cons
Pros:
- You build equity over time
- Home value may increase over time
- You may reap tax benefits. See also Tax Advantages for Homeowners
- Unlimited freedom to customize your living space
- Sense of home stability/permanence
Cons:
- Closing costs can be prohibitive. See also What are Closing Costs and Pre-Paids
- Responsibility for maintenance and repairs which requires time and effort
- Less flexibility to move (at greater difficulty/expense)
- Home value may decrease
- Recent tax laws could hamper tax benefits
In other words, are you planning on putting down roots in your community or are you craving more flexibility? If you feel certain you’ll stay in a home for at least 5 years, buying a home could make sense. However, renting is the better option if you prefer to be more nomadic. Sure, you can buy a home and then sell it within a few years, but the costs are hardly worth it.
See also Mortgage & Affordability Calculators.