Buying vs Renting: Which is right for you?

The purchase of property can certainly be an advantageous goal, but you want to be certain that goal fits with the rest of your “big picture” goals. 

Unlike many other things you may have purchased in the past, real estate should appreciate over time.  So, a new home can be a fantastic investment.  The equity you build in your property can be one of the biggest assets realized from home ownership. Another financial advantage is the interest credit you can realize when filing your annual income taxes.  Of course, it will take some time for these financial benefits to be realized, so homeownership should be viewed as a long-term commitment.  A definite “pro” to buying a home is the ability to truly budget by knowing that your monthly payment should minimally fluctuate.  Your payment will consist of the principal applied toward your loan amount, interest based on the rate of your loan, property taxes, and your homeowner’s insurance (PITI).  Even with an adjustable-rate mortgage, you should have plenty of time to prepare for any of those adjustments in your payment amount.  Likewise, your tax rate should remain consistent, and your homeowner’s insurance is typically renewed annually keeping it consistent, as well. 

In addition to the financial benefits, homeownership gives you the freedom to make the property your own sanctuary.  You can paint the walls any color your want, or even knock down a wall or two if want to change the dimensions of space.  How wonderful it is to plant a tree in your yard and watch is grow over your years in your home.  Of course, along with this flexibility comes the reality that all maintenance also becomes the homeowner’s responsibility.  If the roof has a leak or an appliance stops working, that is something you are going to have to deal with.  When renting a property, most fixes are handled with a simple call to the property manager.  Renting a property also allows you to be more flexible in your location.  If you prefer to move around a bit, a short-term rental can make it much easier for you to leave the property when the opportunity presents itself.  The most obvious downside to renting is the lack of ownership. That means that your monthly payment is simply going into the owner’s pocket, and you are not realizing any equity for yourself.  It also means that your hands are most-likely tied if you enjoy a good decorating DIY project because the owner will not likely want you to alter their property.

Ultimately, you must weigh your interests and options to decide whether owning or renting is the best plan to fit your lifestyle. If you really want to consider the breakdown from a numbers perspective, this article from fortune.com may help you sort out what will work best for you: