Is it financially better to own a home or rent? This is an interesting question. Let’s put it to the test.
To truly compare, let’s look at the benefits and costs of each one. Then you will have to balance these out with your own individual goals and priorities.
• Income tax breaks on mortgage payments.
• The money you spend each month goes towards your investment dollars, not someone else’s.
• A house can be a good asset for your total net worth.
• A home can often be leverage for other borrowing.
• Owning a home can help your credit and financial security.
• With home ownership, it can often be easier to buy up into a nicer home.
• Adding together a mortgage payment, taxes and insurance – your monthly expense is often more than rent.
• Occasionally the price of a home can go down.
• Saving for the initial down payment can take time and money from your budget.
• If your budget or income changes, it can be harder to readjust a mortgage vs. just moving to a smaller, cheaper apartment.
• A mortgage is a large debt.
• The wrong type of mortgage can often ruin your financial future.
• There are a lot of empty expenses when you first buy a home – loan fees, commissions, appraisals, etc.
• You can often live in a nicer place than you can afford to actually buy.
• When something breaks you can call the landlord.
• In some rental agreements you don’t have to pay some or all utilities.
• Moving can often be less of a hassle.
• Will free up your money for other pursuits like an education, other investments or travel.
• Can help you avoid debt.
• Often landlords will force you into long term lease agreements.
• In apartments or condos you will live quite close to your neighbors.
• You may have personality conflicts with the property managers and owners.
• There may be large cleaning deposits.