The decision to rent or buy isn't easy. It often comes down to finances, lifestyle, costs and convenience. If you carefully weigh the pros and cons, you'll find the right answer for you.
Advantages of owning
Buying a home may make sense for several reasons. If property values increase and you pay down your mortgage, you'll build equitOpens a popup.yOpens a popup.. This can open the door to future financial resources. When you need funds, you can use your home equity as collateral for a line of credit; you can borrow against it at interest ratesOpens a popup. that are generally lower than other forms of consumer debt.
Also, if you sell your home, you can collect your equity in cash, gaining liquidity. As a bonus, any growth is tax-free if the home is your primary residence.
Advantages of renting
Renting often means predictable expenses and more money in your pocket. Your monthly costs tend to stay the same. And the landlord generally pays for maintenance, repairs, taxes and other property expenses that come up.
Renting makes sense if you plan to move in the short term. The costs of selling a home — real estate commissions, property and land transfer taxes, legal fees and moving expenses — are significant. It could take a few years to regain those costs if your new home appreciates in value.
Also, there aren't any long-term commitments beyond the length of your lease when you rent. You can relocate relatively easily and quickly.
Disadvantages of owning
Making a down payment and investing in a home could be a lost opportunity. Why? Because if you invest your down payment, it could grow in value faster than a property.
Plus, you can add home maintenance costs and property taxes to your list of regular expenses.
Disadvantages of renting
Rent is money out the door, with no return, because a rented home doesn't build equity. At the end of your lease, there’s no financial payoff as there may be with owning. So, the money you pay in rent could be a lost investment opportunity.
Finally, as a renter, you’re tied to your landlord by a legal contract. The landlord can ask you to vacate the property at any time if they have a legal reason and give you proper notice.
The decision to own or rent depends on your circumstances, plans and lifestyle choices. While owning a home means more responsibility and expense, the feeling of security and potential increased value can make it a worthwhile investment.