In the age of high rent and even higher mortgages, the debate of whether to rent or buy continues. While buying has historically been the preferred choice over renting, the reality is much more nuanced. Buying or renting isn’t one-size-fits-all since it involves several other factors in your life, such as your age, lifestyle, work life, family life, and more. Before you commit to buying a new home, it’s important to explore the pros and cons of renting and buying.
Pros and Cons of Renting
Pros
You can skip out on homeownership costs
An old saying goes, “Your mortgage is the least you’ll ever pay for your home.” There are untold other factors that you may have to pay for, including maintenance, repairs, taxes, HOA fees, and myriad other things that crop up from time to time.
You’re not tied down
If you’re planning to move or need to relocate, renting makes your move a lot easier than if you own a home. While you may have to sell or rent out your home if you move, you can just pick up and leave after your lease expires.
Cons
You don’t build equity
As many critics of renting have noted, you’re not building equity while renting since you don’t own the place you’re living in. While this is a valid point, you should weigh this factor against the other considerations in your life, such as your age, lifestyle, and ability (or willingness) to settle down permanently.
You’re limited with home improvements
With renting, you also have a limited ability to make any home improvements where you live. Any changes you do make will either need to be undone or will benefit your landlord when you leave.
Pros and Cons of Owning
Pros
You earn equity
Owning a home provides more than just a place to live - you’re investing in something that will likely earn value over time. These long-term benefits pay off significantly since the value of your home historically goes up by the time you sell.
You can make any changes you want
Unlike renting, you’re free to make the renovations you want to your home. You can paint the walls whatever color you want, hang however many pictures you desire, and change the flooring as you like. Your home is yours for the decorating!
Cons
You’re paying more money upfront and more often
As we’ve noted, owning a home is an investment, both in time and money. Buying a home has many upfront costs, such as the down payment, insurance, and closing costs. You also have several expenses after you buy, such as any renovations you want to make, property taxes, HOA fees, and more. And instead of having a landlord handle all of it for you, you’re left to do it yourself.
You risk losing money if you aren’t financially ready
If you miss a mortgage payment, you face much more severe consequences than if you were renting. By missing your mortgage payments, you risk being evicted AND losing everything you’ve invested in the home. With so many costs associated with homeowners, buyers should consider if they’re truly ready for the commitment before settling down.
Questions to Ask Yourself
What can I afford in monthly housing costs?
Coming up with a monthly budget is your first step to learning if now is the right time for you to buy. It can also help you plan your down payment and otherwise arrange the logistics of buying a home.
How long do I want to be in this home or location?
If you’re not planning on staying for more than 5 years, it may be better to rent. However, if you know you’ll stay somewhere for longer than that, it’s worth purchasing a home.
What are my goals for my finances, career, and family?
Buying a home is a big decision. You want to make sure it’s going to meet your family’s needs for years to come. If you plan on having four or five kids, it’s best to buy a home that will be big enough for all of you instead of hopping from home to home.
Does my housing situation need to be more flexible or more stable?
Homes are a long-term decision. If you aren’t certain you want to stay, or if you have a career that may require relocation, it’s important to factor those into your decision.
Am I ready to invest in something long-term?
Homes are an investment. You need to make sure you’re prepared for that. Homeownership can be grueling. While new homes limit this, every home will need maintenance.
What do my finances look like?
Buying a home has significant costs associated with it, including maintenance, repairs, and more. You want to make sure that, after your down payment and closing costs, you have enough saved in case there’s an emergency.
What does the housing market look like where I want to live?
They say that “time in the market is better than timing the market.” But local real estate markets can fluctuate pretty rapidly. You also need to consider whether you can afford a home in the neighborhood where you want to live or if you’ll need to move to a suburb further out to get the home you want.
The Big Decision
The question of whether you should rent or buy is much more complex than many make it out to be. So many things depend on your personal preferences, lifestyle, and goals. The best thing to do is what you’re doing right now - researching and thinking about the factors that influence such an important decision. By taking your time to decide, you’re doing your due diligence about what these next steps look like for you. If, after reading this, you’re convinced that homeownership is the best choice for you, Hunt Custom Homes is a great place to begin your home search. We craft homes that are the right fit for you, your preferences, and your lifestyle.
View our available homes or contact us about building your own, unique home. We are here to guide you through the entire process.
