Renting Versus Buying
Is buying better than renting? It depends on whom you ask.
If you question your financial planner, she'll probably assert, "Yes!" and pull out a spreadsheet showing the investment and tax advantages.
If you ask a globetrotting couple you know, they'll probably disagree with her emphatically, arguing that a home will leave you little time or money for recreation.
The truth is, buying a home is a highly individual decision,
dependent on a variety of lifestyle and financial factors. Ask yourself these
questions to help determine if it's right for you:
How long do I plan to stay in my community?
Homes take time to appreciate in value. If your employer is hinting around at relocation, or the walls of your small town
are closing in on you, consider that you might only break even – or even take a loss – if you have to sell your home quickly.
If your job situation seems secure and you enjoy the amenities your community offers, buying is a next logical step.
Do I have time to maintain a home?
Unless you're currently leasing a house and handling all the maintenance yourself, home ownership will generally require more of your time
than renting. Of course, for some homeowners the associated work – raking leaves, mowing the lawn and painting the family room – serves as recreation in
Some buyers will purchase a condominium in order to avoid
time-consuming outdoor chores. If you're looking at that option, be sure to
factor in property management fees in your housing estimates.
Can I afford it?
Most renters assume that buying costs considerably more than
renting, but you may be surprised. First, if you consider the monthly total on
your rent, utilities and renter's insurance, you might be paying more for
housing than you thought.
Second, even if you don't have tens of
thousands saved for the standard 20 percent down, many lenders today offer lower
down payment options. Some will even finance your closing costs. Remember
though, the more you finance, the more your monthly payments will be.
Do I want to personalize my living quarters as I please?
Maybe you've grown tired of the eggshell white walls of your cookie-cutter apartment,
or you can't convince your landlord to replace the brown shag carpeting in your
rental. When you own your home, you can mostly do with it as you please – paint
the kitchen in Green Bay Packers gold, cover your den in knotty pine paneling or
wallpaper your bedroom ceilings in bright florals. True, it all costs
money – but when you buy your own place, it's a choice you get to