Renting vs. Buying a Home: Things to Think About

With housing prices variable in many areas and a mortgage rates changing, people who don't own their home may be thinking about buying instead of renting. Here are points to consider:

Why Rent?

Freedom to move: If you unexpectedly need to find different housing or move to another location, as a renter you won't have to worry about the risk of selling a home for less money than you paid for it. This situation of owing more than your home is worth could occur if there were an over-supply of housing on the market. And, if you are already planning to move in just a few years, renting may be a better choice financially. Even if the value of your home went up, the costs associated with selling it could exceed your profits.

Smaller up-front costs: Renting may be the way to go if you don't have the cash needed for a down payment on a home and for closing costs on a mortgage. For renters, the big initial payout is a month or two of rent as a security deposit. Compare that to the thousands of dollars that many homebuyers need for a down payment, plus closing costs. If you don't have a certain amount for a down payment generally 20 percent of the home's value the lender may require you to also pay for mortgage insurance, which will add to the cost of your loan.

No need to worry about major maintenance costs As a renter, you're unlikely to be responsible for replacing a leaking roof or a broken furnace.

Monthly costs are often lower: Rent-related expenses usually will be less than what a homeowner would pay each month in "PITI" - principal and interest on a mortgage, property taxes and homeowner's insurance. If you rent, you should purchase renter's insurance, which is likely to be less costly Read More>>