Renting vs. buying a house pros and cons
Buying a home can be one of the most common ways to build wealth. But there's more to buying than you may think. Here are some pros and cons to help you decide whether buying or renting is right for you. Learn more about what to look for when buying a home and understand how much you can afford to spend on a home.
Pros to buying a home
There are many good reasons to buy a house if you can afford it. Here are some of the biggest advantages:
Buying a home remains one of the most common ways for people to build equity. Equity is what you have when your home is worth more than you owe, which can happen over time as the home's value increases as you pay the mortgage principal down.
Interest paid on a home mortgage is typically tax-deductible, as are property tax payments. Be sure to speak with an accountant or financial advisor to understand the implications.
Put down roots
Owning a home helps you establish yourself in a community and grants you more flexibility to customize your home to fit your needs and tastes.
Cons to buying a home
While buying can be advantageous, there are also some significant drawbacks.
Buying a home is a significant investment and can sap your savings. Even if you get a mortgage, you'll still need to make a sizeable down payment and pay closing costs.
Moving can also be a challenge. If you buy a home and decide to move later, you'll incur the costs of moving and selling your property.
Pros to renting a home
Maintenance is covered
You're typically not responsible for repairing or maintaining your property when you rent. When something breaks, all you need to do is alert your landlord.
Flexibility on location
Renting allows you to try different types and sizes of homes, condos, and apartments. You can also test out other neighborhoods to see what you like.
Cons to renting a home
Cost of rent may change
Your rent will typically change every 12 months, and if you need to move, there's no telling what landlords will be charging in your area when you need to find a new place.
Stability isn’t guaranteed
When your lease is up, your landlord might not renew it, and you'll have to move.
Is it better to buy or rent a house?
Whether you rent or buy a house, it is a big decision that comes with a lot of responsibility. Homeownership is still a dream for many, but before you leap, make sure you do it at the right time and for the right reasons.