The decision between buying a home and renting a place is one of the biggest financial decisions that many people have to make. Many factors can drive the decision.
Some initial and recurring costs to consider:
Other factors to consider:
Buying vs. Renting Pros and Cons
Pros for Buying:
· Home equity and wealth creation.
· Greater stability.
· Ability to renovate and customize your home.
· Tax benefits.
· No monthly payments once mortgage paid off.
· Property appreciation.
Cons for Buying:
· Cash required for down payment.
· Mortgage interest.
· Property taxes.
· Homeowner’s insurance.
· Recurring repair and maintenance costs.
· The risk of property depreciation.
Pros for Renting:
· Greater mobility.
· Landlord takes care most of repairs and maintenance.
· Having amenities that are expensive to maintain (e.g. pool, gyms, rooftop terrace, etc.)
· No exposure to home price depreciation.
Cons for Renting:
· Restrictions. E.g. owning a pet, painting a wall.
· No home equity or ownership.
· Recurring rent payments.
· Increasing rent, even with rent control.
· No tax benefits.
The decision to rent or buy should be based on finances as well as lifestyle and preferences. In general, buying a house is better if you plan to stay at the house for a longer time. Buying a house also gives you an opportunity to build wealth.