For the last few years renting a home has typically been less expensive than paying a mortgage. But with historically low mortgage rates and rising rent costs that trend may be shifting. In fact, rents are expected to rise even faster than home values in 2015 in McCall. But, the choice between renting and buying a home can be one of the most difficult decisions you will ever make. There is no right or wrong answer but ultimately, making that decision depends on your financial situation, your future plans and the lifestyle you wish to live.
In general, home ownership is often a better alternative to renting as it offers significant financial benefits and also peace-of-mind.
- Buying can be cheaper than renting, especially if you plan on being in the home for at least 4-6 years.
- Equity is built up as the mortgage is paid down.
- Many homeowners can deduct mortgage interest and property taxes from their income-tax bills.
- You can tap into the equity of your home for big-ticket expenses, such as college tuition, at interest rates that can be lower than other financing options.
- Your monthly payments will remain stable and you won’t have to worry about a spike in rents.
- Beyond financial calculations, homeownership can create stability and security for you and your family.
- You can own pets and paint the walls any color you like without getting permission.
However, you may want to consider renting if:
- Your lifestyle and career require mobility and you do not see yourself staying in a home for more than four years.
- You plan on downsizing or retiring in the near future.
- Your rent is lower than average—and you expect it to stay that way.
- You are building your savings and your credit and can get better-than-average returns from whatever you’re investing your cash into.
- You’re in a super-expensive housing market or the monthly cost of renting is lower for a home of similar size and quality in the same community.
- You do not have adequate income or savings for maintenance or repair costs in a home.
- You do not have the time or desire to take on necessary home maintenance that accompanies homeownership.
Buying and owning your own home can be a very rewarding experience if you are properly prepared, know what to expect and make the right financial decisions. There are several advantages to homeownership, but it comes with additional responsibilities and potential risks as well. Essentially, in making the decision to buy vs. rent you need to evaluate your finances, recognize where you are in life and determine what will suit your situation the best.
