Is it better to rent or buy? Im going to discuss a few key points that may help you decide whether buying a home is right for you at this point in your life. Being a Realtor you would think I would be pushing the buying side of this equation pretty hard, but I understand that there are times when renting makes way more sense.
Lets look at some of the ups and downs of renting vs buying.
When you rent you don't have to come up with a substantial down payment. However you do usually have to provide a deposit in case of damage to the property. This is a sticking point for a lot of people looking to get out of renting and into their own home. If you don't have the minimum 5% of the full price of the home, the bank will be unable to loan you the money for a mortgage (there are special 0% programs that apply to some people and properties). This isn't really a pro/con item, but it does prevent people from making the leap from renting to buying so I think it deserves mention.
One major draw back of renting is that it’s never fully your space, which means that mosts times you can’t go wild with the paint or do any other customizations that will change the space too much. When you own a home its your space to do with as you please, paint it whatever colour you like and make it into the home you've always wanted. Pride of ownership is one of the major reasons that people decide to buy a home.
Additional Fees and Taxes
One of the benefits of renting is that you don't have to pay taxes on the property which will save you some money over the course of the year. You also pay less to insure your space and things, and for those higher risk mortgages you avoid having to pay insurance on the mortgage itself. As a home owner you have additional fees, but you are in control of your property and as long as you're making the mortgage payments you cant be evicted. Rentals can be subject to rent increases, where as a home owner you know what your payments are going to be for the term of the mortgage.
As a renter if something breaks you just call a guy and say can you fix this for me, and it doesn't come out of your pocket. As a home owner you have to budget for regular maintenance as well as have an emergency fund for when the furnaces goes in the middle of winter. If you plan repairs and do proper preventative maintenance this is just something to be aware of instead of scared of.
Stability and Flexibilty
A huge benefit to owning a home is that its yours and no one is going to evict you from your residence, if you pay your mortgage. with renting your at risk to the will of the landlord once your lease is up, you may be required to move with only a few months notice. When you buy a home you're investing the money and over time will get it back when you sell (unless the market starts trending down after you bought). It may seem like when your renting, money is just flying out the window never to return again, but depending on your circumstances it might be the option for you. Its my job to help people buy homes, but that doesn't mean I don't see the advantages of renting. When you rent you're buying the freedom and flexibility to leave whenever you choose. There may be a lease but you don't have to worry about selling your house and the current market conditions. There is a freedom in renting and depending on the lifestyle you live or the amount of time you plan to be living in one place it might make more sense to rent. Whether you want the pride of ownership that comes with buying or the freedom of renting there are pros and cons to both sides.
When it comes down to it there are good things and bad things about either scenario, you have to look at where you're at and decide am I prepared to make the investment that is buying a home or am I going travelling next year so that doesn't really make any sense for me. If you plan to be in one location for X amount of years and have a down payment saved up then I would argue that buying always makes sense. Theres no right or wrong answer, it just comes down to lifestyle and what makes the most financial sense.