Whether to rent or buy a home is no small decision. It requires careful consideration of your current and desired lifestyle, future plans, and finances. There is no one-size-fits-all answer, and the option that works best for you may change over time. So which one is right for you? Read on to see which circumstances may make renting the better option, and which ones indicate that it’s time to buy.

Why Rent?

You Only Plan on Living in an Area for a Short Period of Time

Numerous studies and Renting vs Buying calculators will tell that if you only plan on living in an area for a couple of years, then it is smarter financially to rent rather than buy a home only to have to sell it again when you leave, potentially losing a bunch of money due to closing costs and real estate agent’s fees.

You Want to Avoid Costs Associated with Home Ownership

It is undeniable that homeownership comes with some extra costs such as maintenance and repairs. When you rent, your landlord will be in charge of covering the costs of any repairs or maintenance, although they may not be done as well – or as quickly – as you would like.

You’re New in Town and Want to Feel Out the Area Before Purchasing a Home

If you find yourself moving to an unfamiliar city, it may not hurt to rent for a year or so while you feel out the area. This will allow you to become acquainted with the city’s nuances, figure out which neighborhoods suit your lifestyle, and find your dream home.

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Why Buy a Home?

You Plan on Living in the Area for a Long Time

While renting is usually the cheaper option for people living in an area for only a couple of years, purchasing a home can be vastly cheaper if you plan on living in one area for a long time.

You Want to Build Equity and Grow Your Net Worth

One of the biggest benefits of homeownership is the ability to build equity. Home equity is, put simply, your share of the value of your home. For example, if you put a 20% down payment on a $350,000 home, your home equity is $70k. Now imagine that a few years down the road, you’ve paid off an additional $70k worth of your mortgage, and your home has appreciated in value to $425,000. Your home equity is now valued at $215k, even though you’ve only put in $140k towards your mortgage!

You Want the Freedom to Make Your Home Your Own

Another major benefit of homeownership is that your home is yours to make your own! You have the freedom to paint, screw holes in the walls to hang up picture frames or shelves, make renovations, and otherwise do as you please!

You Value the Stability that Home Ownership Brings

When you rent, you are subject to the whims of your landlord. If your landlord decides to sell your property, convert your apartment complex into condos, or drastically bump up the rent (if you’re not in a rent-controlled location), you could suddenly find yourself in a desperate search for new housing. Conversely, you may be desperate to move, but find yourself locked into a lease with substantial fees for breaking your lease early. When you own your home, it is up to you when you want to move out.

Home Ownership Comes with Financial Predictability

Another instability that comes with renting is ever-rising rent. Unless you live in a city with rent control and your apartment is covered by it, you could find yourself facing unpredictable rent increases each time your lease is up for renewal, especially if you live in a desirable part of town. With a fixed-rate mortgage, however, although your property taxes and home insurance premiums will likely rise a little over time, your monthly house payments will never increase.

The Pride of Home Ownership

One of the final perks of homeownership is simply the pride that comes with obtaining part of the “American Dream”. You’ll find a sense of belonging within your community, and the sheer satisfaction that comes with coming home to a house that’s truly yours.

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