- Renting may seem more affordable at first
- Buying has tax benefits, greater freedom and a chance to build equity
- Compare the real costs and benefits of both
In an uncertain market, should you continue to rent, or is it time to buy? We help you decide.
Owning one's own home has often been considered a standard part of the American Dream, and yet it is not a step that should be taken lightly. For many people, deciding not to buy a home and continuing to rent may be the better choice. We hope that this guide will help you to make the rent vs. buy decision wisely. Should you decide to buy, Bills.com provides a variety of tools and calculators to help you find the right home mortgage and provides great quotes from its network of mortgage lenders.
The benefits of buying a home
Owning a home comes with many benefits, including the flexibility to decorate and remodel the home to your family's needs, the opportunity to build equity in the home, and stability and peace of mind. In addition, should home prices move in your favor, you can begin to build a nest egg for the future. US taxpayers also benefit from the ability to deduct mortgage interest payments from their taxable income.
The responsibilities of home ownership
On the flip side, however, home ownership comes with some burdens to which renters are not exposed. Homeowners must typically take out a mortgage to finance the purchase and come up with a down payment in order to qualify for that mortgage. They also face the risk that home values will remain flat or drop. In this case, rather than building a nest egg, there is the risk that the borrower may owe more on his or her home than it is worth. Homes also must be maintained over time, and property taxes must be paid — these are expenses that a landlord will typically cover for renters.
Renting a house
Renters enjoy flexibility — if their job moves or they want to downsize, it is typically easier to move quickly. Their landlords will usually pay for necessary maintenance on their homes and cover property tax payments. But on the downside, in many cities and states, there are few protections for a renter — with notice, a landlord can ask the renter to move out or raise the rent significantly. Furthermore, many families will want to decorate or make changes to the property that are not possible in most rental situations.
Come back soon to use our forthcoming Rent vs. Buy Calculator. In the interim, make the following comparisons as you decide whether to rent or buy:
| Buying A Home | Renting a Home |
|---|---|
| Mortgage payment, property tax, homeowners insurance | Rental payment, renters insurance |
| Equity in home, potentially growing over time, more if house prices rise | No equity |
| Tax relief for mortgage interest | No tax benefit |
| May be hard to sell/move quickly | Easy to move out |
| Exposed to risk of property price decreases | Exposed to risk of rent increases |
| Must maintain home | Landlord maintains home |
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