Many people dream of owning their own home. Indeed, it’s wonderful to have a place that’s truly yours, where you can keep your pets, raise your family, and knock down a wall or two if you want to.
However, there are benefits–and drawbacks–to both renting and buying. Here’s what you need to consider before you make your choice:
How long will you be in the home?
In general, the longer you plan to stay in a home, the more sense it makes to buy. If you’re working at a short-term job, or have your sights set on moving in a year or two anyway, it might be better to rent for now.
What value do you place on stability, flexibility, and privacy?
If you value stability, buying a house is great: you can settle in and make upgrades, and there is no risk of a landlord selling the house and putting you out of a home. If your job is unpredictable or you prefer to move around, renting is ideal. If privacy is important to you, owning your own home means never having another visit from a landlord.
Are you prepared for the costs?
This is possibly the biggest factor in considering whether to rent or buy. You don’t want to turn your entire savings into a down payment.
You might be able to get into a mortgage with a monthly payment that is lower than typical rent. However, there are some big move-in costs you need to be ready for; when buying a home, the down payment is only the beginning. You’ve got closing costs to consider, and from there on out, any necessary repairs will be yours to deal with–and pay for. You’ll also have property taxes and homeowner’s insurance, which is generally quite a bit more expensive than renter’s insurance.
However, when you buy, you’re building equity, and some of your expenses will be tax deductible. Meanwhile, as a renter, you’re subject to yearly rises in rent and even a landlord’s decision to stop renting to you.
The choice is personal. Some people are very happy with renting and prefer to let a landlord deal with maintenance, repairs, and taxes. Others own homes and wouldn’t dream of renting again. If you’re looking to settle in to a neighborhood for several years and can comfortably afford a down payment, it might be time to start looking for your very own home.