Whether ‘tis nobler in the mind to suffer the maintenance and upkeep costs of homeownership, or pay a landlord a monthly rent that builds no equity—there’s no clear cut answer, and it depends on your individual situation.
Let’s explore the pros and cons of renting vs. buying your own home.
Pros and Cons of Homeownership
First of all, owning your own home can be incredibly fulfilling. It’s a rite of passage for many people; a measure of accomplishment and success. It’s also a sign of stability, cementing you into a community and allowing you to put down roots.
Other pros of homeownership include:
- Interest payments are tax deductible
- You build equity as you make your monthly mortgage payments
- On average, a home’s value will increase 4 to 6 percent a year (though historically at about the same rate as inflation)
Homeownership isn’t all pros. Homes aren’t the best investment; in fact, stocks will give you a better average return on your money. And there’s always the possibility that your home will decrease in value, erasing much of the equity you’ve built.
Here are some other cons of homeownership:
- High maintenance costs
- It can be difficult to sell or relocate if you get a new job or need to move
- High property taxes in many areas
- Large down payment and closing costs (although these can be negotiated)
Pros and Cons of Renting
Many people are choosing renting over buying, and for reasons that may surprise you. Here are some of the benefits of renting:
- Let your landlord deal with the costs of maintenance
- Better mobility—it’s easier to move when you want
- Avoid gambling on the housing market
Renting has its drawbacks as well:
- Rents are high, and have been getting higher
- You aren’t building any equity
- No tax benefits
- You don’t get to use the home and decorate it as you wish
The Choice Is Yours
Whether you decide to rent or buy depends on your individual goals and circumstances, but either way you’re going to need some good insurance.