Rent vs Buy

At some point in your life, you will ask yourself the question, “Is it better to rent or to buy?” and the answer is almost always: “it depends on the state of housing and your circumstances.” That’s why the “rent vs. buy” question requires people to examine all the elements of the decision, since where we live is an emotional decision as well as an economic one.

There is no right or wrong when it comes to renting or buying a home. There are too many factors that influence the decision on whether one should rent or buy. Here’s one way to break down the issues by explaining the pros and cons of renting vs. buying.

Pros of Renting

Lower cost upfront as a renter, you will be required to pay first and last month’s rent and perhaps a security deposit for a pet. You can have freedom and flexibility if you are new to the area, you can rent and use this time to check out neighborhoods to see where you might possibly want to buy. By renting you can test an area without committing to it.

Invest money elsewhere, you can take money that would normally be spent on a down payment and house costs and invest in the stock market or other investment opportunities that could get a better return on value, depending on location.

Uncertainty in your career, if you think you might need to move in the near future, or are mulling job changes where you could be relocated elsewhere in the country, renting affords the freedom to come and go as needed.

Uncertainty in income if you expect a pay hike or pay cut in the near future, that can change your borrowing ability as well as impact your ability to pay a mortgage.

Time to establish credit if you have bad credit. By creating a history of on-time rental payments, it can help you build good credit that you would need to qualify for a mortgage.

No maintenance when the pipe leaks under the sink, you don’t head to your nearest hardware store, you head for the telephone and call the landlord.

Incidental expenses occasionally, the...