Buy vs. Rent

Buy vs Rent

The choices between buying a home and renting a home both have many advantages and the decision varies depending on the unique needs of the individual.

Home ownership has perks in itself other than the simple fact that it becomes your personal space, your home. Renting a home is ideal, for instance, if you intend to relocate and want to get to know the area before making a commitment to buy a home.

Reasons to buy a home include significant tax advantages, building equity and pride of ownership. While you are creating the perfect home for yourself you are also creating net worth and building good credit by making your mortgage payments on time.

If you decide to rent a home you are likely paying someone else’s mortgage and they are getting a tax credit.  You are also helping to increase your landlord’s net worth instead of your own.  But if you buy your home you are paying the monthly mortgage payment and you are now paying approximately $3,600 a year in interest.  Another advantage of buying a home is that you can itemize those interest payments and deduct that from your taxable income.

Renting a home offers flexibility as some landlords don't require a lease and allow you to rent on a month to month basis allowing you to leave on 30 days notice.  Other rental agreements might require a 6 month or 1 year lease which still gives you a good portion of flexibility to leave after that time frame.

Another factor to consider when weighing whether to buy a home or rent a home is financial uncertainty. For instance, if you are freshly out of school and joining the work force then the wiser idea might be to rent until you have better financial security and are able to more comfortably afford a mortgage payment.