Home Finance: Owning Versus Renting


To buy or to rent, that is the question. But which makes the most sense for you?

SHOULD YOU BUY?

The decision to buy a home isn't purely financial — there are many factors that come in to play. But if you're at the right point in your life and the price is right, buying a home can be a smart idea.

Owning your home can often be a way to get more living space for less money. And there can be some real financial advantages. While you'll have to keep up with a mortgage and regular property taxes, you can deduct these taxes, as well as interest on your mortgage, on your tax return. And in a good economy with a strong real estate market, your home can be a great investment.

Of course, those mortgage payments — and the down payment that you'll have to make up front — can be a significant expense. Even if you do have the money to cover these costs, it's possible that buying isn't the right decision for you — at least not yet. If it's likely you'll move around in the next few years, a home can be a burden even if it's a long-term investment. And your money might earn more with fewer obligations elsewhere.

IS IT SMART TO RENT?

Having relatively little long-term obligation is one of the things that makes renting so appealing to some. While you have to come up with a few months' worth of rent as a deposit, it won't be as much as a down payment on a home. You're not responsible, financially or otherwise, for repairs or maintenance. And since you haven't actually made an investment in your home, you can move without worrying too much about losing money.

But of course, not making that investment means that as long as you rent, you'll be spending money to live without getting anything back other than a roof over your head. And if rent prices skyrocket, chances are you'll be at the mercy of the market. Still, the short-term affordability and the freedom to move make renting the more popular choice for many people.

Whatever you do, try to make a decision that makes sense financially and emotionally — don't pick a place you know you'll hate just to save money, or move somewhere you can't afford just because you have your heart set on living there.