Is buying or renting the better choice for you? In this article, we'll cover the pros and cons of renting vs. buying a home, along with who is the best fit for each option. Whether you're a first-time home buyer, a young professional looking for a new place, or a family considering a move, this guide will help you make the best decision.
Both renting and buying can be good options, depending on your circumstances and long-term goals. You can see purchasing a home as a long-term investment while renting can be a good short-term move that offers flexibility to save and change locations quickly.
Who Should Consider Renting?
Many people rent during college or while working their first job. It is usually seen as a stepping-stone to buying a home, although it can be a good long-term housing option, depending on your circumstances.
Benefits of Renting
There are several benefits to renting. Here are the top pros to consider:
- It's generally less expensive. When you rent instead of buy, you don't have to pay property taxes. You don't need to save a down payment, pay for homeowners insurance, or cover any additional expenses associated with buying a home.
- Renting is easily accessible. Because you don't need a down payment to rent, you can often find housing more quickly. While landlords have an application and approval process, renting is not as complex as purchasing a home.
- It offers low responsibility. If something breaks at a rental, you can call the landlord. You're not primarily responsible for your residence.
- You can have high flexibility. Many renters like the fact that they can move quickly if needed. When you rent, you aren't committing to stay in an area beyond the scope of your lease.
- Renting can help build credit. If your eventual goal is to own a home, paying regular rent may help you build credit to assist with preapproval when shopping for a home loan later.
If you're not financially ready to be a homeowner or unsure where you want to live in the next few years, renting can give you flexibility. It is often a good choice for young families or professionals who are just starting their careers and may move later.
What to Consider Before Renting
Renting has several downsides you can avoid with homeownership, such as:
- Rent costs can change. Your lease price can vary year-to-year because your landlord can change the rent every time you renew your rental agreement. Not every landlord does this, but many do in response to inflation or to make a higher profit.
- You're not building equity. Because you're paying into property someone else owns, they gain all the long-term benefits of your payments. You will never own the property and just pay for the present benefit of living there.
- Renting creates uncertainty. Since you aren't settled there for good and rent can change, you may have to move sooner than you would like. The uncertainty of rent costs and unexpected moves can create stress.
Renting isn't always ideal if you are looking to build a stable community. If you'd like to put down roots in your location and stay there for a long time, buying a home is almost always a better option.
Who Should Consider Buying a Home?
While you may have to rent for a while, many people ultimately want to own property one day. Let's look at why so many people dream of buying a home instead of renting.
Benefits of Buying
There are many benefits to buying your own home, but most people make this decision because of the long-term financial benefits. Here are the top pros to purchasing a home:
- You can have fixed payments. If you choose a fixed-rate mortgage, your mortgage payments won't change unless you refinance your home. While other costs can vary, your largest monthly home payment will remain the same until you've paid off the loan.
- You can build equity. When you purchase a home, every mortgage payment goes toward valuable property you will fully own one day. Even before you fully pay off the mortgage, you could resell your property and get money back for it.
- Owning has tax benefits. If you itemize deductions, you can deduct state and local real estate taxes and home mortgage interest from your tax return. First-time homeowners can also claim certain tax credits to help with buying a home.
- Buying creates stability. Owning a home puts you in charge of how long you'll stay in one location. While you can sell in the future, you can also live there as long as you would like.
- You get autonomy over your home. Unlike when renting, homeowners control what happens to their living space. They can repaint the walls, add a garden to the yard, or change all the light fixtures without having to consult anyone other than an HOA, if applicable.
- Customization is easy. If you build your own home, you can make custom choices to create a place you will love. Renters often aren't allowed to make significant changes to the properties they are leasing.
Buying a home can be a wonderful decision for families who want to put down roots in an area. Young professionals who are concerned about building equity and fixed payments can also benefit from buying instead of renting.
What to Consider Before Buying
Here are the top three things to consider before choosing to buy:
- Buying takes a large initial investment. When you purchase or build a home on land, it's best to have a down payment. You'll also need finances to cover closing costs, moving expenses, property taxes, and more.
- You have full responsibility. Owning a home means you fix items when they break and handle yard work. These additional expenses can cause some people to prefer renting.
- Owning a home means less flexibility. In the short term, you become less flexible when you own a home. You have to sell or rent before you can move, so changing jobs and locations is harder.
Buying a home may not be the best decision if you're unsure where you'd like to be in the next five years. While you can resell your home, that may take longer than you'd like. If the initial investment is too high right now, you can rent temporarily while saving for a down payment.
Find a Home You Love With Keystone Custom Homes
At Keystone Custom Homes, we help people build or buy their dream homes in Pennsylvania, Maryland, and North Carolina. Our home designs have over 30 floorplans and customized design elements so you can love the place you live.
When you work with us, we'll take you through the process from finding a homesite to making design choices and completing construction. Request an appointment today by calling 717-368-9831 and learn how we can help you reach your dream of owning a home you love!
