The decision to rent or buy depends on each individual’s circumstances. Each option has its advantages and disadvantages. When evaluating renting vs buying and which one makes the most sense for your situation, there are several factors to take into consideration.
These include:
- The market where you want to live
- How much down payment you can afford
- How long you plan to live in one place
- Mortgage rates and terms
- Rent costs and amenities
In some parts of the country, the real estate markets are significantly higher. In these areas, it may make more sense to rent. The up-front cost of owning a home is usually the most common barrier to home ownership, and in high-priced areas this is even more challenging. Also consider how long you plan to stay in one location. Home ownership’s financial benefits come after many years of owning that same home and taking care of it.
A very basic comparison of Renting vs Buying:
When to Rent:
- The real estate market is high-priced and renting is more affordable
- If you plan to relocate regularly or in the near future
- If you don’t want the responsibility of owning a home
- Less upfront savings required (typically rental deposit and one month’s rent needed)
- You wish to rely on a landlord to complete upgrades/fixes
When to Own:
- You are ready for the financial commitment (with a steady income and good credit score)
- You want to accumulate equity that you can then borrow against
- Interest rates are low and you qualify for a fixed rate mortgage
- You want to put down roots and stay in one area for a while
- You want to have ability to customize your living space as you see fit
Each person’s situation is different, so deciding whether to rent or buy isn’t always simple. It’s important to determine what makes sense for you and your financial situation.
