Scott Westfall
Sep 14, 20214 min
Updated: Jul 28, 2023
Choosing between purchasing or renting a home is a crucial choice in life, but which is right for you? Renting and buying a house in 2023 each hold their own pros and cons. If you are unsure whether to rent or buy, let’s explore what to consider before deciding.
Want help deciding on renting vs. buying in your own particular situation? Discuss it with our experts for free.
There are some significant upsides to renting as opposed to buying. Here are a few major factors in your decision:
Versatility and the freedom to move around to other places if you want the choice to. You won’t feel as if you have to stay in the area for the long term.
Landlords typically pay for maintenance and repairs of the apartment or home.
Renting allows you to test out all different types of living spaces.
Along with the pros, there are also some drawbacks to renting a home or apartment:
You have limited ability to customize your living space - it may never quite feel like yours.
Rent could go up over time, or the landlord might sell or decide to stop renting the place you live in.
You potentially have to share the building you live in with other tenants.
There can be a limited sense of home stability and permanence.
On the flip side, there are some pros to buying vs. renting:
Your home value may increase over time after purchasing your home, building home equity for you.
You may be able to reap tax benefits from owning a home.
You have unlimited freedom to customize your living space however you please with interior decorating and landscaping.
You will have a sense of home stability and permanence, unlike renting your home or apartment.
Aside from these factors, there will be some cons to look out for when buying a home:
You will be responsible for maintenance and repairs, which require time, money, and effort.
You will have less flexibility to move, as it is more complicated to sell your home than to stop renting.
Certain tax laws could hamper tax benefits on your home. (Local real estate experts can help you determine how these might affect you.)
The state of the housing market also tends to affect buying and renting decisions. Check out our forecast for this year's market trends.
1. Short or Long Term?
Ask yourself: are you planning on a short-term stay or a long-term stay in the area? If you feel confident you’ll stay in a place long term, buying a home could be the choice for you in the end. However, renting is the better option if you prefer to be more flexible or know you will want to move to a different home in a couple of years.
2. Cost of Renting vs. Buying
Renting can be cheaper than buying a home because of the upfront costs when it comes to buying, including a down payment, closing costs, moving costs, renovations, and other home maintenance tasks. In addition, home ownership often comes with monthly payments like property taxes, homeowners insurance, mortgage insurance, and homeowners association fees. Remember: just because you can afford a mortgage payment doesn’t mean you can afford a home - expenses add up. (Read our blog post about the true cost of owning a home.)
However, buying a home could be cheaper for you in the long run. Purchasing property offers you an opportunity to build equity and add to your home's value, and it allows you to take advantage of tax savings. And once you pay off your mortgage, your cost of living becomes significantly cheaper, even with home repair costs.
3. Flexibility vs. Stability
Life can be hard to predict sometimes. If you intend to stay in one place for a long time and have the financial means to do so, buying a home might be your best choice. However, it’s essential to look at your current life situation and think about whether or not it is likely to change within the next few years. Because if it does, your housing needs could also change. Take the time to figure out what you want in a home, your budgeting needs, and what kind of home might be the best fit for you not only now but in the long term.
4. Keep the Pros and Cons of Both Renting And Buying in Mind
Take a look back on the pros and cons for both renting a home and buying a home. Take into account your life goals and plans for the future. List out these different factors and how they affect you during your decision-making process.
5. Keep Your Finances in Mind
Be realistic about your finances when choosing whether to rent or buy. Once you can estimate the costs of renting versus buying, be honest about whether you can afford other upfront costs and do some careful budgeting to know what you can and can’t afford.
(But don't let these myths about buying a home stand in your way.)
The Bottom Line
There is no consistent answer to the choice of whether to rent or buy a home. Depending on your life and financial situation, the answer might change. No matter what you choose, it’s vital to pick the choice right for you. Take your time, don’t rush this process, and always work with experts you can trust!