Should I Rent or Buy a House?
Lease renewals, rising rents, noisy neighbors and outdated bathrooms are exhausting. It’s enough for anyone to start considering options when it comes to their living situation. The debate whether to rent vs. buy is a question mulled over by everyone at one point or another. We want you to be prepared to take the leap, but only if it’s right for you.
As with any large financial commitment, deciding to rent vs. buy is complicated. The answer lies in both personal preferences and financial circumstances. Both options carry benefits and risks. So, is it better to rent or buy a house? Let’s find out.
The Benefits of Renting vs. Owning
Believe it or not, renting does have its perks, and depending on your lifestyle it may be the right decision to renew that lease. Renters are more mobile and save quite a bit of money on moving costs—generally because they have less stuff. If you plan on moving around for your career, relationships or you have some serious wanderlust, renting allows for this kind of flexibility.
Renting may also be a cheaper option since you’re not responsible for property taxes, full utilities and other upfront costs. You can save even more by deferring home renovations and passing responsibility for repairs to your landlord. If you’re a current renter, you probably don’t have to cut the grass, pay for trash pickup, deal with furnace repairs or a leaky faucet. Upkeep is the landlord’s problem. So, if you like the idea of coming and going as you please without the hassle of regular maintenance, when deciding to rent vs. buy you might want to go with the former.
The Downsides of Renting a Home
While you may want to customize your space, making expensive changes to a rental, like a kitchen or bathroom renovation, might not be the best investment when you won’t profit from the enhanced equity in the home. Most landlords will still let you paint and decorate to make the space your own, but as your needs change or family grows, being able to further customize your living conditions becomes more important.
Investments in a rental rarely pay off financially, while updates to a home can enhance the overall value of your asset. When you’re a lifelong renter, your rent check doesn’t go towards ownership every month. That means you can’t borrow against that amount for future expenses or reap the return of your improvements to the value of the apartment when you do move out.
When it comes to renting vs. owning, your hands are also tied when it comes to property upgrades. That means before you paint, hang pictures or renovate a bathroom you’ll have to check with your landlord. Thinking about welcoming a furry friend into your life? That’s also contingent on your lease agreement and it could cost you more every month.
A final consideration is payment consistency. When your lease is up, rent often goes up too. Especially if you live in a city with competitive property values. Sure, you can negotiate for new appliances or some simple upgrades, but rent increases are part of the deal. Thinking that buying a home sounds pretty good right now? Visit our rent vs. buy calculator to find out your estimated savings.
Making the Case for Buying a Home
Are you ready to put down some roots? There are many benefits to owning a home. So, let’s take a deeper dive into the latter side of the renting vs. owning debate.
Ownership itself is the most obvious benefit of buying a home. When you buy a home it’s just that. Your home. Renovate, decorate, and update anything and everything. Can you put a price tag on freedom like that? There’s a certain sense of pride that comes with buying a home, too. It’s an important milestone and a goal worth working toward.
Rising rents are a thing of the past when you decide to buy. With a fixed-rate mortgage, your payments will stay the same for the life of that loan. That means becoming more financially stable, being able to plan financially and build savings for the future. Speaking of your future, we should bring up that equity word again.
Equity is a way of measuring how much of your home you own. It’s often the current market value of your home minus any loans or liens you have on your home. You can grow equity it two ways, paying down the balance of your loan, and increasing your home’s value. Homes tend to increase in value on their own over time. They can appreciate more with strategic renovations. When you own your home, each mortgage payment and curb appeal update is an investment in your future. You can tap into that investment with a home equity line of credit (HELOC) or when it’s time to sell your home.
Home Buying Tradeoffs
When it comes to buying, the tradeoffs are just as obvious. Owning your own home comes with higher upfront costs. You’ll need to start saving for a down payment – 20% of the mortgage is ideal – as well as closing costs, insurance and other fees. But there’s good news—first time home buyers may be eligible to receive assistance.
Regular maintenance is also a tradeoff when deciding if you should rent or buy a home. Yard work, repairs and other updates need to be made on a regular basis, and when you decide to put down roots, it’s just that—deciding to stay in one place for an extended period of time. If you’re projecting a big move in the coming years, owning a home may not be the best choice.
Try our Rent vs. Buy Calculator
You’ve weighed your options when it comes to renting vs. owning a home and it’s time to take the next step. We’re here to help. If hard numbers are your thing, visit our rent vs. buy calculator to make the decision a little easier.
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Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.