Given the hefty upfront cost associated with purchasing a home, most young people begin their independent lives renting. As they build careers, start saving up, and starting their own families, many choose the route of buying a home. On the other end of the age spectrum, homeowners nearing retirement may choose to sell their family homes, downsize, and become renters once again. Whether you are a renter interested in buying a home, or a homeowner wondering whether renting makes more sense at this point of your life, it’s time to evaluate the relative cost, benefits, and drawbacks of owning versus renting your home!
Costs of Buying and Owner Your Home:
- Upfront and Closing Cost:
- Earnest Money
- Down Payment
- Home Appraisal
- Home Inspection
- Property Taxes
- First Year’s Homeowners Insurance
- Other Closing Cost
- Recurring Costs:
- Loan Payments
- Property Taxes
- Homeowners Insurance
- Private Mortgage Insurance
- Utilities
- Maintenance
- Special or One-Time Cost:
- Furnishing
- Moving Cost
- Repairs
- Improvements and Renovation Projects
Costs of Renting Your Home:
- Upfront Cost:
- Security Deposit
- First Month’s Rent
- Nonrefundable Deposits
- Moving Costs
- Recurring Costs:
- Monthly Rent
- Pet Rent
- Renters Insurance
- Utilities
- Laundry
Advantages of Buying:
- Building Equity Over Time
- Tax Benefits
- Potential for Rental Income
- More Creative Freedom
- Sense of Belonging and Community
Disadvantages of Buying:
- Potential for Financial Loss
- Responsibility for Maintenance and Repairs
- Most Homes Aren’t Sold Furnished
- High Upfront Costs
Advantages of Renting:
- No Responsibility for Maintenance or Repairs
- Relocating is Easier
- No Exposure to Real Estate Market
- Credit Requirements Generally Less Strict
- Some Utilities May Be Included
Disadvantages of Renting:
- No Equity Building
- No Federal Tax Benefits
- Limited Control Over Ongoing Housing Costs
- Limited Housing Security
So as you work toward an ultimate decision, keep an open mind. Remember that it is better to wait and make the right decision than rush into a choice you may come to regret.