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How to know if you should rent or buy a home?

By Hannah Whittenly | January 26, 2017

While everyone needs a place to live, it may be better to rent a house as opposed to buying in some situations. However, there are also many good reasons to buy a house as opposed to renting. How do you determine whether your money is better spent making a rent payment or making a mortgage payment?

How to Know Whether or Not You Should Buy or Rent a House

Pros and Cons of Buying a House

If you are looking to put roots down in the community, it is worth your money to buy a home. This is because you will have a reason to spend $1,000 or more every month for the next 10, 15 or 30 years.

The home will also appreciate in value, which means it can be a great way to grow your wealth as time passes. Another benefit is that you can sell when you are ready as opposed to being forced out of a home because your lease is up.

Some downsides to buying a home include the cost of mortgage interest and insurance. You also have to pay property taxes as well as set aside money for maintenance and furnishing your home.

One way to determine if you are ready to buy a house is by talking to a realtor, such as one from Carter Real Estate. He or she can go over your budget, your ability to make a down payment and if there are any loans that you may qualify for. Even if you aren't ready to buy today, a realtor could help you start on the path to owning a home.

Pros and Cons of Renting a House

The biggest benefit to renting a house is that you are typically only obligated to live there for a year at most. In some cases, you may be able to sign a short-term lease or find a landlord willing to rent to you on a monthly basis. This means that you would be free to leave by giving 30 days’ notice.

The biggest downside to renting is that you are paying someone else's mortgage for them. In most jurisdictions, there are not tax breaks for those who pay rent like there are for those who pay a mortgage. You may also have to move on short notice if the owner no longer wants to rent to you. '

Renting a home is ideal for those who are not ready to commit to the community or aren't sure about their long-term financial situation. However, if you have a stable income, want to stay where you are and can qualify for a mortgage, buying a home may be your best choice.

About the author: Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She enjoys kayaking and reading books by the lake.
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