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Is it better to rent or buy a house?

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asked Oct 2, 2015 in Real Estate by anonymous
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Deciding whether to rent or buy a home is a personal decision and must be based on finances, stability, and your ability and willingness to deal with maintenance and repairs.

 

FINANCES

 

When considering which option is most financially feasible, you must compare the monthly costs of renting versus the expected monthly mortgage payment. In addition, you must have enough money to make a down payment while still keeping a sufficient amount in reserve to pay for closing costs, utilities, insurance, taxes, maintenance and unexpected repairs. Keep in mind that once you put money into your house, it is not available for you to use for investments, vacations or other personal items. Also, even though you may have a fixed-rate mortgage, your monthly costs may still rise as taxes and insurance costs rise. You do get a tax deduction for interest paid on your mortgage, but that should not be your main reason to buy a house.

 

STABILITY

 

Another thing to consider is how long you plan to live in the home. If you are married with kids and have a fairly stable job, you may plan to stay put for many years, in which case buying a home may make sense. On the other hand, if you are single, your job is iffy, or you are thinking of relocating for any reason within next few years, it is probably better to rent. Renting makes it easier to move when the need arises, whereas when you own a house, you may have to wait months or years to find a buyer for your home.

 

DEALING WITH MAINTENANCE AND REPAIRS

 

When you own a home, you are responsible for arranging for and paying for repairs and maintenance instead of picking up the phone and calling the landlord to handle the matter. Unless you know how to make household repairs, such as fixing leaky faucets and toilets, you may find owning a home to be an expensive and daunting proposition. Painting, lawn maintenance, gutter cleaning and appliance repairs and replacement are all issues that can be inconvenient and costly to handle.

 

To help you decide whether buying or renting a home is a good idea, calculators are available.

 

Bankrate  offers one at http://www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx.

 

Time offers one at http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

 

Below is an infographic that may also help you decide whether renting or buying a home is best for you:

 

 

 

Sources:

1. http://www.bankrate.com/finance/mortgages/should-you-rent-or-buy-a-house-1.aspx

2. http://money.usnews.com/money/personal-finance/articles/2014/10/10/should-you-rent-or-buy-7-questions-to-help-you-decide

3. http://www.forbes.com/sites/billconerly/2013/11/11/should-you-buy-a-house-or-rent-the-economics-of-homeownership/

answered Oct 2, 2015 by jems (19,790 points)

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