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Renting vs. Buying — What’s The Right Choice For You?

3-Minute Read
Purchasing

Is it better to buy a home or rent? It's a personal choice to carefully consider since both options can significantly affect your lifestyle and finances. While recent research shows it's cheaper to buy than rent in many major cities, weighing all the factors will help you determine what might work best for you or your family. Let’s take a closer look at the pros and cons of renting or buying a house.

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The Pros of Homeownership

  • Predictability: If you have a fixed-rate mortgage, your monthly payments will remain consistent over the term, or length, of your loan. Consistency and predictability of payments mean you can more efficiently budget and plan, including setting aside funds for education, retirement or emergencies.
  • Investment: A home can be your biggest and most important investment. When you have a mortgage, every monthly payment adds to your equity and means you own a little more of your home. While home values can fluctuate, over the last three decades the average home value has increased around 4% each year.
  • Personalization: After buying a home, you can make it your own with updates and renovations. From small upgrades like adding a fireplace to big updates like building a pool — your home is your oasis to tailor to yourself or your family’s needs. It's your choice as a homeowner.

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The Cons of Homeownership

  • Upfront Costs: When buying a house, you’ll usually have to make a bigger upfront payment than if you were signing a rental agreement with a security deposit. These initial costs consist of the down payment, closing costs and other fees and could present somewhat of a hurdle at the beginning. However, there are a variety of options available to make homeownership more attainable and affordable right from the start.
  • Commitment: Purchasing a home is a long-term commitment. That means one of the biggest downsides of homeownership is that a spontaneous move isn't really in the cards. You'll have to sell the house first or find renters.
  • Maintenance: Tasks like fixing or replacing a burst pipe or an old furnace and shoveling snow or mowing the lawn will most likely be up to you as a homeowner, if your neighborhood or community doesn’t partner with a homeowners association (HOA) that will do maintenance for you.

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The Pros of Renting

  • Commitment: With the freedom to move at the end of your lease, life changes can be a lot easier to manage without the responsibility of selling or finding new residents. Your budget changed? New job in a different city? Expanding your family and need additional room? For some, these changes may be easier to adapt to without being committed to a house.
  • Responsibilities: You can relax knowing that maintenance tasks and upkeep are usually taken care of by the management company or landlord. It's not your job to mow the lawn or shovel snow and when something breaks, someone else steps in to fix it.

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The Cons of Renting

  • Personalization: Most rental agreements prohibit tenants from making major changes to the unit, such as painting or drilling holes in the wall. That can mean being stuck with tiles, cabinets or carpet you don’t like.
  • Security: Once your lease is up, it’s not always up to you to renew for an additional year. A landlord can refuse to extend your lease if they want to renovate, sell the place or lease to new residents willing to pay higher rent prices.
  • Monthly Payments: Rent has increased across the country, rising nearly 5% since 2019. Unstable monthly payments might mean that rent costs can unexpectedly surpass your budget as you renew your lease, leaving you with no choice but to move.
  • Upfront Costs: Similarly, there are also upfront costs associated with renting. You may need to provide a security deposit that is typically about 1.5 times the rent, and sometimes even the first and last month's rent as well as any application fees. You may also be locked into one service provider for your utilities with not much wiggle room depending on who the property management company or landlord partners with. That means very little control over the cost of some of your utilities.
  • Investment: Your monthly rent is a form of income for your landlord, helping them reach their financial goals. You don’t receive any financial return yourself and once that money is gone from your bank account, you won’t see it again.

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The choice between renting and buying comes down to your personal situation and preference. If you like the flexibility to be able to move at the end of your lease and ensure most maintenance is taken care of for you, renting might be your cup of tea. However, if you're looking to create a home that is truly yours from top to bottom and gain financial freedom through your investment, buying a house could be a better fit. Check out our rent vs. buy calculator to get additional insight, and continue making informed decisions by starting your search below!

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