Owning a Home vs Renting: Pros and Cons

When deciding where you want to live, it’s a good idea to think about what makes more sense based on your long term goals and lifestyle. The key question is usually this:  should you buy a home or rent one?

What you choose is likely to define your lifestyle in the future. Most of the time, people are prone to buying a home citing the freedom that it offers while those who advocate living on rent argue that a rental home costs less than owning a home.

It’s not always better to own a home than rent or vice versa; there are factors that you should consider before deciding either way. Let’s take a look at the pros and cons of each.

Pros of  Owning a Home

Homeownership is a major part of the American dream. Ownership brings with it a level of satisfaction in life, not to mention a feeling of stability.  Plus, owning a house helps to build equity over time, making it a valuable asset.

Owning a home means you aren’t accountable to anyone but yourself when it comes to home upkeep or decor, which is often a gripe among tenants who receive mandates and a list of restrictions from their landlords. Ownership also comes with another perk:  you get tax deductions!

Cons of  Owning a Home

All is not perfect when it comes to owning a home. As the homeowner, you’re responsible for ensuring you can meet all the financial obligations that come along with ownership, including mortgage payments. And, although it rarely happens, there may come a time when your home value declines.

When you own a house you’re solely responsible for all maintenance expenses. On the contrary, those expenses are the landlord’s headache when you rent.

Pros of Renting

It’s typically less expensive to rent a home.  There’s considerably less paperwork involved when securing one as well. Renting also gives you the flexibility to relocate if you need to for work or school.

Although you are responsible for any damage incurred while living on the property, maintenance remains the landlord’s responsibility. You also don’t have to worry about how the real estate market is behaving or if the market value of your home is declining; when you rent, you can live relatively carefree without having to bother with all of that. All you have to worry about is paying your monthly rent—you can leave concerns about property taxes to the landlord.

People are often under the impression that living in a rental home means you are throwing away money every month. That is simply not true. The thing is, you’re going to have living costs one way or the other. Why not save money by renting?

Cons of Renting

Even if you spend your whole life renting an apartment, you can’t really call it home.  Property ownership is the only thing that brings with it the perks of fully belonging to a community.

You’re also not always going to find an apartment that meets all your wants and desires because it wasn’t designed with you in mind.  You’ll inevitably be forced to compromise on one feature or another.

One major area of concern is that you might have to move several times in your life, and every move might not be one you want to make. Towards the end of your lease, landlords are under no obligation to renew the lease and, if the landlord decides otherwise, you may have to leave the property and find a new place to live.

Another downside to renting is you can never claim equity in the rental home even though you will be paying monthly rent similar to mortgage payments.

Owning vs Renting: General Considerations

Experts suggest minimalists and millennials should consider buying a home at the start of their careers. It makes sense to invest in a home if there’s no plan to explore life in other cities or even life on the other side of town. Owning a home might be burdensome at the start, but eventually, it will become a formidable asset. And the earlier you buy, you increase the likelihood of seeing a considerable return on your investment.

Over time, homeowners earn equity in their property that can be used to refinance a second home or rent out their first.  Buying a home not only increases your assets but also provides a passive source of income.

However, the advice is only good if you can afford to pay a down payment on a home and comfortably pay mortgage installments.  If not, or if you don’t want to be tied down long-term, renting a home is probably more practical for you.

FAQs

What should I consider when deciding whether to buy or rent a home?

Your financial situation, your future plans, your lifestyle, and the local housing market.

What are some potential risks of owning a home?

Some potential risks of owning a home include unexpected maintenance costs, declines in property value, and the possibility of foreclosure if mortgage payments are not made.

How can I determine whether buying a home is financially feasible for me?

It’s important to consider factors such as your income, debt, credit score, savings, and the costs associated with owning a home (e.g., down payment, mortgage payments, property taxes, and maintenance expenses). Consulting with a financial advisor or mortgage lender can also provide valuable insight.

What factors should I consider when deciding whether to rent or buy a home?

Financial situation, the local housing market, personal and professional plans for the future, lifestyle, and preferences.

Conclusion:

Given everything discussed here, don’t get carried away with what people have to say about owning a home versus renting a home. It’s not always about money. Instead, think about what makes you comfortable and the vision you have for your life.

There’s no hard and fast rule that says owning a house always makes more sense. It’s an individual decision driven by the unique circumstances of your life. Weigh the pros and cons of what owning a house versus renting a house looks like for you and then make your own decision.