Should I rent or buy a house? It’s a common question people ask themselves, especially when considering buying a home for the first time. That’s why taking a close look at renting vs. buying pros and cons is so crucial.
Exploring the benefits and drawbacks of renting vs. owning a home makes it easier to figure out what’s right for you. You’ll get a stronger feel for the trade-offs by comparing the options directly. And once you’ve reviewed the information, you’ll know which path is the best fit for your situation.
So, if you’re trying to figure out, “Is it better to rent or buy?” here is a look at some renting vs. buying pros and cons that could make deciding simpler.
Renting vs. Buying a House Pros and Cons
Pros of Buying a House
When you buy a house, you get all of the benefits of ownership. You can update or customize the property to your liking, allowing you to make the space completely your own. There’s also a sense of stability and security that can come with buying, something that many people appreciate and value.
Owning your house may also give you extra privacy. You don’t have to worry about a landlord needing entry. Instead, the only people who can come inside are those you invite.
Additionally, as you pay down your mortgage, you’ll build equity. You have the ability to tap that value later or keep the equity as a means of building wealth. That’s a big one in the pros list when it comes to renting vs. buying pros and cons.
If you have a mortgage, you typically qualify for some tax breaks, too. In some cases, mortgage interest is deductible. As a result, you can reduce your tax burden while you build up equity. In the mortgage vs. rent debate, that’s potentially a big plus on the side of mortgages.
Cons of Buying a House
Buying a house is a long-term commitment. In some cases, that isn’t an issue. However, if the neighborhood declines and no longer meets your needs or you have to relocate quickly, owning your home can make moving to a new place harder.
Unless you have enough income to support two mortgages or a mortgage and rent, you may have to sell before you can relocate. If so, you may end up stuck where you are for longer than you’d like.
Another point to consider as you try to figure out, “Is it better to rent or buy?” is the cost of repairs and maintenance. As a homeowner, you’re responsible for all of those costs. If you aren’t ready to shoulder them, you may find yourself struggling financially or living in a home that isn’t in ideal condition.
Additionally, housing markets do fluctuate. They can trend downward or upward and may even change directions with surprising speed or regularity. While the long-term trend tends to be value increases, if you have to sell at a time when the market isn’t in your favor, you may end up with a loss.
Pros of Renting a House
When you’re renting, the most significant benefit tends to be flexibility. You don’t own the property, so you can move with greater ease if the need arises. Once your lease ends, you’re free to go no matter what.
Another pro of renting is that you’re usually not fully responsible for maintenance. While tasks like cleaning and tackling tiny issues can fall into your hands, the landlord has to handle the big stuff. As a result, you don’t have to worry about the direct cost of routine maintenance or major repairs related to wear and tear.
Cons of Renting a House
While flexibility is one of the biggest benefits of renting, not owning the property can work against you. Beyond what’s outlined in your lease, you have no say in what happens to the home. The landlord could sell when the mood strikes. Additionally, they aren’t required to re-up your lease or maintain the same price if they do offer an extension.
Additionally, since the property isn’t yours, you typically can’t do anything that alters it notably. Painting walls a different color, upgrading kitchen appliances, redoing a bathroom, changing the flooring… none of that is usually allowed.
If something needs repairing, that may not be in your hands either. While local laws usually set standards for how long a landlord has to address the issue, that timeline may be slower than you’d prefer. If that’s the case, you have little recourse but to wait.
Renting vs. Buying Pros and Cons Myths
Some points are commonly listed as renting vs. buying pros and cons that aren’t entirely accurate.
For example, in some cases, property taxes are considered one of the cons of buying a house. However, landlords will wrap that cost into your rent, so you’re usually paying it anyway. The same can go for maintenance and repair expenses.
Another point to consider is pricing stability. While in this part of the renting vs. owning a home debate, it may seem like buying clearly wins, that isn’t always the case.
People associate rent with less stability in most cases because the price can change whenever your lease period ends. However, mortgage payments aren’t always stable.
Your homeowner’s insurance and property taxes are commonly wrapped into your monthly payment if you have a mortgage. If either of those increases, your mortgage payment can shift. Plus, if the change in those costs causes your escrow account to fall short, you may have to pay a large lump sum or deal with a significantly higher mortgage payment without much notice.
While that price change isn’t technically related to the loan, it still adjusts your monthly payment. What you have to pay may move up or down throughout the life of your loan, adding a bit of unpredictability. Plus, if the price does change, unlike renters, you can’t just move out to find a cheaper place. Instead, you have to navigate the cost difference, period.
Finally, while the mortgage interest deduction can lower your tax burden, you may only be able to capture this benefit if you itemize your taxes. If you don’t have enough itemized deductions to exceed the value of the standard deduction, you aren’t technically getting any tax benefit for having a mortgage.
Is It Better to Rent or Buy a House?
In the end, whether renting vs. buying a home is better for you depends on your unique situation. Reflect on your values, budget, and preferences. Use that as a guide as you review the renting vs. buying a house pros and cons above. That way, you can make the choice that’s right for you.
