Rent Vs Buy

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Reasons for Buying Instead of Renting

Many benefits are derived from owning a home including a sense of freedom and privacy. Renters must comply with rules set forth by the landlord including noise restrictions and pet ownership. Homeowners have the freedom to make any permanent changes to the property without having to consult with anyone. Homes give owners the added benefit of being in charge of an appreciating investment while enjoying living in it. Market fluctuations have do not affect fixed mortgage payments, unlike rent payments, which are volatile and can change whenever a lease term ends.

Tax Deductions

Homeowners can deduct mortgage interest from their gross income to help lower their taxable income when filing income tax forms. Being able to itemize deductions helps with tax obligations depending on filing status. All interest paid on a mortgage and accompanying costs associated with owning a home are deductible. Even loan discount points may be included in the deduction.


Purchasing a home gives the owner the distinct advantage of building equity over a period of time. A home is a valuable asset that grows as the mortgage is paid down. Equity is the difference between the total mortgage amount and the current market value of the home. When the housing market is favorable, the return on the initial investment can be substantial. Many people choose to borrow against built-up equity. This is known as a home equity loan that many people use to pay down higher-interest loans, finance a college education or make home improvements.

Possible Reasons for Not Buying a Home

Some people are not willing to take what they perceive as the risks involved in buying a home. Even though owning a home provides stability, many people are not willing to give up the perceived freedom from being able to walk away from a rental. Renting provides more flexibility to just pick up and move without the hassle of having to sell a property first. Some may lack the confidence that is needed to commit to a long-term debt knowing that the mortgage payment is not the only expense involved in home ownership. Many are just not ready for this commitment. Anyone who is in an unstable relationship may fear the possibility of being left to handle the debt alone. For them, renting is a much better choice.

Financial Reasons for Renting Instead of Buying

There are circumstances where renting is better for some people. Career positions that require extensive traveling can limit an individual’s living choices. Being away from home for extended periods of time make it almost impossible to maintain a home and yard. Many times those people, who are in the process of building a career, only need a place to stay when they are not on a trip. Renting works out better for them especially when it is much cheaper to rent than to own. In some places, rent can be as much as fifty percent cheaper than a comparable sized house. The extra monthly expenses associated with home ownership are eliminated with renting. Besides the monthly rental payment and possibly utilities, there are no other costs associated with renting. Other than adhering to required lease terms, it is simple to move whenever necessary.

Costs Directly Associated with Home Ownership

When considering the possibility of purchasing a home, it is best to deal with reality. Sometimes the purchase of a home is an emotional decision rather than a sound financial one. It is much better to know up-front the costs of owning a home and then decide whether buying it is the best choice. Mortgage payments are only the beginning of the expenses associated with owning and maintaining a home. The initial cost of purchasing includes making a required down payment of between ten and twenty percent of the purchase price. Inspection fees and closing costs must be figured into the equation. Homeowner’s insurance, property taxes and utilities can be a major monthly expense that must be factored into the overall cost. Landscaping and lawn maintenance are additional expenses. Many neighborhood have a Homeowners Association that requires an annual fee which is used to maintain streets and any common areas.

Making an Educated Decision to Purchase a Home

People living in the United States are fortunate to be able to make lifestyle choices. Some feel that home ownership is the fulfillment of the American dream, while others prefer a much more flexible lifestyle. For those who prefer owning instead of renting, purchasing a home is probably the largest single investment they will ever make. For this reason, it is important to understand everything involved in home ownership before making the final commitment to buy. Those who research the market, examine their own finances, and try to separate myths from truths about home ownership are better prepared to make this serious decision. If they conclude that their goal of achieving the great American dream is an attainable one and understand everything associated with this long-term commitment, they will reap the benefits of home ownership. Understanding affordability of a home purchase helps individuals make smart financial choices. Seeking professional assistance is advisable for those with questions or concerns. Advance preparation ensures a smoother transaction.