SHOULD YOU BUY OR RENT A HOME?
Should you buy or rent a home? Conventional wisdom used to hold that owning a home has almost always been a wiser investment than renting, especially over time. For many, homeownership still makes perfect sense, but an increasing number of people choose to rent. While there are trade-offs and benefits to both renting and buying, the decision should ultimately rest on personal preferences in lifestyles, goals, and finances.
Costs of Owning vs Renting
Many see buying a home as a major investment and a capital gain. If you intend to stay in your home for more than 3-5years and anticipate the home will appreciate in value over time, buying is often a better financial investment than renting. People who own their homes also often cite a sense of security, because they are not at the whim of landlords and leases.
However, costs associated with homeownership extend beyond the mortgage payment and include property taxes and insurance, as well as buying and selling costs, and maintenance and repairs. Home repairs can be costly and unexpected.
Rent can provide a sense of financial stability because it is a predictable monthly payment. Renters will almost never be surprised with property tax fluctuations or substantial maintenance bills, as these are the landlord’s responsibility. Monthly rent payments, when cheaper than mortgage payments and other ownership costs, can save income that would have otherwise been invested in a home. The renter can then choose to invest in other areas instead, such as in a retirement fund, life insurance policy, or paying off debt.
For some, breaking even on homeownership will be well worth the investment due to the non-financial rewards that ownership can bring. These include the freedom to remodel, design, and landscape however one wishes, own pets without needing permission, the pride of ownership, and the lack of other restrictions on activities, occupants, and guests.
For others, the freedom of renting brings intangible rewards that make the cost of renting more attractive than a mortgage. These include greater flexibility to pick up and leave at the end of the lease, move more easily for jobs, and far fewer responsibilities and costs for maintenance and repairs.
Mortgage vs Rent Calculators
There are many online mortgage calculators that balance the costs of renting with purchasing a home. Search for one that best considers your overall financial picture for the most accurate estimates. Click here for an example!
At Berkshire Hathaway HomeServices in Sumter, South Carolina, “we know great homes.” Visit our site to see both home sale and rental listings! For more information, please contact one of our real estate agents at the John M. Brabham Real Estate office by calling (803) 775-1201.