Pros and Cons of Home Buying vs Renting

The Pros of Home Buying

• The perks of privacy.

• Good investment - Homes typically increase in value, build equity and provide a nest egg for the future.

• Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.

• The interest and property tax portion of your mortgage payment is a tax deduction.

• There’s pride in home ownership, which also build a relationship or network to your community.

The Cons of Homeownership

• Homeownership is a long-term financial commitment.

• You’re responsible for all maintenance on your home. This can include inexpensive repairs like fixing a broken toilet to complex and costly repairs like replacing a furnace.

• Owning a home ties you to your community, making it more difficult to suddenly pick up and leave a location.

• Although mortgage payments are usually fixed, they’re generally higher than rent payments.

• Buying a home requires a down payment, closing costs and moving expenses.

• The value of your house may not increase – especially during the first few years.

• Borrowing against your home equity, to help you with a debt consolidation, for example, can leave you ‘house poor’

Financial Disadvantages of Renting

• There is no tax break for renting. You won’t be able to claim any deduction for mortgage interest and property taxes when you file your tax returns.

• Your housing costs aren’t fixed like they are with a fixed-rate mortgage. Your rent will most likely grow from year to year.