While everyone needs a place to live, it may be better to rent as opposed to buying in some situations. How do you determine whether your money is better spent making a rent payment or making a mortgage payment?
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.
Pros and Cons of Renting
The biggest benefit to renting is that you are typically only obligated to live there for a year. 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 in most jurisdictions, there are not tax breaks for those who pay rent like there are for those who pay a mortgage.
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.