Renting vs. Buying a House: Which Is Better?

There are many things to consider when deciding between renting or buying a home. It's helpful to come up with a pros and cons list to compare the advantages and disadvantages of each. 

Advantages of Renting a Home

Below are five reasons for renting:

  • The landlord covers maintenance and repairs. 

  • Renters aren't responsible for property taxes.

  • There's no down payment required.

  • You can move with a 30-day notice.

  • If the property value goes down, it doesn't directly affect you.     

Disadvantages of Renting a Home

Here are five reasons against renting: 

  • You don't have the opportunity to earn equity.

  • Rent increases are standard.

  • It's common to pay first and last month's rent before moving in.

  • There are pet deposit fees if the landlord allows pets at all.

  • The owner must agree to home improvements. 

Advantages of Buying a Home

 The following six reasons support purchasing:

  • You benefit if the home's market value increases.

  • You can access your home's equity.

  • You can make improvements as you please.

  • You can rent out your home. 

  • You can pass on your home to your heirs. 

  • You can own multiple pets. 

Disadvantages of Buying a Home

Buying may not be the right choice for the following four reasons:

  • A down payment of at least 3% of the home loan amount is required. 

  • You're tied to the home until you can resell it or rent it. 

  • You can lose money if your property value goes down. 

  • There are annual property taxes to pay, which increase as the value of your home increases. 

You Decide To Purchase a Home, What's Next?

Getting pre-approval from a lender before you begin your home search is a good idea. A lender can also give you a close estimate of your monthly payments, taxes and fees based on a particular loan amount. The better your credit score, the lower your interest rate and payments. In addition, if you put at least 20% down, you won't be required to pay mortgage insurance. 

Your Home Search

After receiving pre-approval, it's time to start looking for a house to call home. You can begin by researching home sales online to get an idea of what's available. Besides searching in your price range, things to consider include square footage, the age of the house, the number of bedrooms and bathrooms, lot size, and the neighborhood. 

Determine Your Long-Term Goals

Once you've looked at some homes for sale and have narrowed your search, consider how long you plan to live in the house and whether you will remodel. If you're handy and have the time for a fixer-upper, you might consider buying an older home. On the other hand, a newer house may have a higher price tag but could be less costly if only minimal repairs are needed. 

You may do quite a bit of searching before finding the right home, but taking your time will help you feel confident about making an offer and avoid buyer's remorse. 

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