Buying or Renting

buying or renting

Think it’s time to buy a home? Is it smarter to keep renting? Choosing between buying or renting a home can be one of the most difficult and important decisions you make in your life. Sometimes, the decision is fairly easy. For instance, if you’re only going to be in town for a year or two, you should probably rent. There are a few other benefits of renting as well:

  • Less expensive utility bills or none at all (depending on how you negotiate with your landlord)
  • No maintenance costs
  • No Homeowner’s Association (HOA) dues
  • No property taxes

But don’t give up on home ownership so soon. There are a few great reasons to buy as well.

  • Appreciation — the fact that real estate usually is worth more over time
  • The mortgage interest tax benefits (Ask your accountant first)
  • A sense of ownership
  • The freedom to decorate and design your home to your tates

Doing the math

If you are considering buying vs renting, there are many “Buy vs Rent” calculators on the web that can help you make the decision. TheUpshot calculator published by New York Times is a great one. The calculator keeps a running tally of the most common expenses of owning and renting. It also takes into account something known as opportunity cost — for example, the return you could have earned by investing your money instead of spending it on a down payment. The calculator assumes that the profit you would have made in your investments would be taxed as long-term capital gains and adjusts the bottom line accordingly. The calculator tabulates opportunity costs for all parts of the buying and renting situations. All figures are in current dollars.

More than numbers

Of course, you want to be smart with your investments, and you never want to buy something you can’t afford. But keep in mind, finances aren’t the only thing to consider when you decide to buy a home. Be sure to consider emotional factors as well — things like pride and a sense of ownership. If you like to build or decorate, having your own home can be a creative outlet for those hobbies. And, if you want a yard with some privacy, o home is probably your best option.

Buying or renting

Ultimately, it’s your decision. If you ‘re well informed about the financial upsides and downsides, if you pay attention to the things that are important to you, you’ll be sure to make the right choice.