Advantages and considerations for renting and buying
Both buying and renting can have their advantages. The better choice for you depends on your current circumstances. To help make this decision, ask yourself a few questions about where you stand today and where you plan to be in the future.
Your Finances Today
Knowing where homeownership fits into your larger financial plan is important. Ask yourself: Would I need to make changes in my budget to buy a home? Would it mean stretching to my financial limits? Would buying allow me to maintain my other savings goals and stay prepared for emergencies?
Renting may provide you with more leftover cash each month, if your rent is less than a mortgage payment (which is often the case). And renters call the landlord when the faucet leaks. Homeowners call a plumber—and pay the bill.
Buying a home may provide you with income tax benefits. And it may offer you the possibility of building equity, because you'd have the opportunity to pay down the loan over time (and possibly pay it off completely), which could increase your home equity (the difference between the home's value and the amount still owed on the mortgage).
Buying a home is a financial commitment that requires you to plan ahead, reflecting on where your life is headed and what you want to accomplish along the way. Ask yourself: What additional financial goals would I like to accomplish after I buy a home? What's more important to me: the opportunity to build equity over time or to perhaps have more cash available now?
Renting usually makes it easier to relocate (to pursue a job opportunity, for example). And if your rent is less than a mortgage payment, renting could allow you to contribute more toward specific savings goals, such as retirement, college, future travel, or other investments.
Buying a home could make sense for you if you want to put your monthly living costs toward something you could eventually pay off and own outright.
Only you can decide whether buying a home fits your life now and will fit your plans in the future.