Renting vs. Buying: Which is Better for You?
Monday Jun 06th, 2022
In today’s real estate market, buying a house can be difficult for many. The rental market isn’t that much easier to navigate. Prices continue to soar for renters. While housing prices continue to cool, interest rates continue to climb. Unfortunately, though, people have to choose between renting or buying. But how do you know which choice is better for you and your goals?
The Buying Advantage
If you’re fortunate enough to fit the criteria for buying, it may already seem like the better option for you. There are many other factors to consider when thinking of buying, though. For example, buying a home offers you a certain sense of stability that doesn’t come with renting. You don’t have to worry about your landlord suddenly selling your home and uprooting your life.
Another advantage to buying is the ability to retain your capital. When you put money down on a house, you will likely get it back when you decide to sell. That is if it sells for the same or more than what you paid.
There’s also the case of building up equity with mortgage payments. When you make that monthly or biweekly payment, it’s paying down the mortgage. Eventually, that will all come back to you.
Investing in the real estate market is also considered a simple investment. You need somewhere to live anyway and you’re consistently paying into it. In some cases, your payment is even cheaper than what market rents are going for.
The Renting Advantage
While there are many advantages to buying a home, it’s not always the best choice. When you purchase a house and get yourself a mortgage, you are far more stuck in the house than you would be if you rented. Renters typically sign one-year leases. Mortgage terms, however, could last much longer. Because of that, when you get a mortgage, you aren’t as free to move around as you would be if you were renting. Having less of a commitment gives you the flexibility that doesn’t come with buying.
There is also the hassle of house maintenance. As a buyer, you have no choice but to fix that leaky faucet or in a worst-case scenario, re-do the entire roof. Renters do not have to deal with any upkeep and that gives you more freedom to use any savings you have other ways. For example, that savings account you may use for a down payment could be used for other things such as other types of financial investments or ventures. You will still build equity, just outside of the real estate market.
There is also the chance that renting can save you money in the sense that it’s not as expensive as some mortgages may be. It all depends on the house price, current interest rates, and what you’re willing to pay for a place to live.
Whether you’re renting or buying, you have to choose the option that’s right for you based on what's important and your own financial situation.