Renting vs Buying a Home

Renting vs Buying a Home

Disadvantages

of Renting a Home

• Your Monthly Payment Can Increase. Rents have been rising in many cities, so you may be facing an increase in your monthly housing payment as soon as your current lease ends.
• You Don’t Build Equity. When you rent, your housing payment provides you with a place to live, but will not provide you with an asset to sell when you are ready to move.
• You Don’t Receive Tax Benefits. Homeowners can deduct their mortgage interest payments and their property taxes from their federal income tax, which reduces the final cost of homeownership. Renters cannot deduct any of their housing expenses.
• You Can’t Paint or Remodel Without the Owner’s Approval. While some landlords are kind enough to let you paint your apartment, you’ll have to get their permission and consult on the color. If you want to make other changes or upgrade an appliance you’ll have to put in a request with your landlord or apartment manager.

• Advantages

  of Owning a Home
  • You Can Build Equity. Historically, homes rise in value anywhere from 4% to 6% per year. Even if your home doesn’t increase in value, though, you’ll be building equity as you pay down your mortgage as long as your home maintains its value.
  • You Can Take Advantage of Tax Breaks for Homeowners. Homeowners can deduct their mortgage interest payments and property taxes when they itemize their federal income taxes. These deductions offset the cost of your housing.
  • Your Housing Payments Will Stay Stable. If you choose a fixed-rate mortgage, your principal and interest payments remain the same for the duration of the loan. However, your homeowner's insurance and property taxes can change.
  • You May Be Able to Use Your Home as an Investment. If you buy a home and choose to leave it, you can rent it out rather than sell and generate income. This works best if you can cover your mortgage (or more) with rental payments. With this in mind, it pays to choose a home that will make a good rental property in the future.
  • You Can Settle in a Community. Once you commit to owning a home, you are more likely to become more involved in your community because you know you’ll be there for years. You can get to know your neighbors, perhaps join a homeowners’ association, or volunteer for projects that benefit the community or the local school.
  • You Have the Freedom to Decorate as You Please. One of the joys of homeownership is the ability to change your environment to suit your tastes. Of course, if you live within a development with a homeowners’ association you may have a little less freedom with your home’s exterior, but you can still paint your kitchen purple if you like.
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