If you are planning on owning your home for 10 years or more, buying is a great option. If your plans are more short term, you may want to rent instead.
Renting – Usually, renting requires a deposit equivalent to the first and last month’s rent. While this may be returned to you at the end of your lease, any damages caused while renting can cause you to forfeit part or all of your deposit.
Buying – As a general rule, the down payment on a home is 20% of the purchase value. To most people, this is a lot of money to pay at one time. Because of this, it can take a while for buying a home to save money over renting.
Renting – When renting, landlords can change rental or utility rates at the end of a leasing period.
Buying – A fixed-rate mortgage lets homeowners know exactly what their monthly payments will be for as long as it takes to pay off the house.
Renting – While some landlords may let renters paint, it is rare to be able to do any big renovation projects.
Buying – The average homeowner spends about $2,300 on home improvements every year. When selling the home, those who did major kitchen remodel got about 62% of the investment back from the home’s increased value.
Renting – A renter does not have to pay property taxes separately.
Buying – The property taxes on a home can take a toll. Average property tax is $243 per year for a home with an average value of $135,000 in the state with the lowest tax rate in the U.S.
Renting – Renters typically aren’t responsible for fixing things when they break. But, renter must immediately notify the landlord when something goes wrong.
Buying – When you own your house, you have to plan for the responsibility of the water heater breaking down or the roof leaking, and paying for that when it happens. Each year, a homeowner should budget 2% of the purchase price of their home for maintenance.
Renting – When renting, there is less security. A landlord can decide to stop renting to a tenant at the end of a lease and if a landlord sells the property. Tenants might have to move on short notice.
Buying – Buying a home allows a family to find a place where they know that they can stay.
Renting – The average cost of renter’s insurance is $12 a month to cover personal property worth $30,000 plus $100,000 in liability coverage. Renters don’t have to pay dwelling coverage for the structure itself.
Buying – To estimate your annual insurance premium, divide the value of your home by 1,000 and multiply by $3.50. For example, for a $250,000 home, the cost of insurance would be about $73 a month, or $875 a year.
Renting – Renters have the option of leaving a place at the end of a lease and don’t have money tied up in their homes.
Buying – A home is an investment that is hard to part with. Selling a home can take months or years and runs the risk of selling at a loss.