Renting vs. Buying: Which Option is Best?
The decision to rent or purchase a home can be a tough call. A lot of factors can influence whether or not buying is the right decision for you, such as whether you are still trying to find the right place to live or you are ready to settle down into a community. While there are tradeoffs for both renting and homeownership, owning a home in the long run can pay off.
Let’s take a look at both.
Renting is beneficial for a few different reasons. It is easy to move more frequently at the end of each lease, which translates to a fairly low commitment for renters. Additionally, landlords typically will take care of any repairs or maintenance the rental may need. If you’re lucky, certain utilities may also be included in your rent.
However, there are some downsides to renting. For one, the price of rent may not be consistent over time, as the landlord can raise it as they see fit. According to RENTCafe, while rental prices in Iowa are lower than the national average, they have been on the rise across the state. Leases have to be renewed each year and don’t promise a consistent living situation over time, as the landlord can also choose to sell the property at any time.
Renting also means you have less control over your home and any changes you might want to make to it. Any home improvements or changes on the property are solely the decision of the landlord. Additionally, any damage incurred on the property can result in losing part or all of your security deposit.
Pros of Renting a Home:
- Less of a commitment
- Repairs and maintenance typically covered
Cons of Renting a Home:
- Inconsistent or rising rent
- Must constantly renew a lease
- Less control over home improvements or updates
The decision to own a house can be a daunting one. There are more upfront costs than renting, such as closing costs, moving costs, and down payments, and the costs of repairs fall on your shoulders.
However, while owning a house is a serious commitment, there are many benefits to homeownership. Building home equity is a major draw to owning a home. Unlike renting, where there are no returns to rent paid, owning a house gives you the opportunity to build equity by increasing the property value of your home. Not only can you make the changes and improvements you see fit to make the space you own, it can pay off when you choose to sell your home if the value has increased.
Tax deductions are another reason homeownership is a good decision. Homeowners can deduct mortgage interest payments, as well as expenses such as energy efficient improvements.
Stability is a major aspect of homeownership. If you choose a fixed-rate mortgage, your housing costs will remain consistent over time, unlike renting where the costs can change year to year. Plus, as long as you pay your mortgage on time, owning a home will boost your credit score.
Along with financial stability, owning a home allows you to settle in to a community, rather than moving from rental to rental. Staying in one place allows you to create ties within an area and become a part of your city or town.
Pros of Owning a Home:
- Building equity in your home
- Ability to make changes and updates
- Mortgage interest payments are tax deductible
- Stability of mortgage payment
- Boost in your credit score
- Belonging to a community
Cons of Owning a Home:
- More up-front costs
- Responsible for home repairs
The pros of owning a home often outweigh the cons. But home ownership isn’t for everyone. Maybe you’re still getting your finances in order or saving up for your 20 percent down payment. Or maybe you enjoy the freedom of living lease to lease. In this case, home ownership may be more of a future milestone.
However, if you’re tired of paying your landlord each month for a space you don’t own, it might be time to buy your first home. Knowing you own your home is an incredible feeling! Our REALTORS® are here not only to help you find the home that’s right for you, but to help you decide if buying a home is in your best interests.
Reach out and we’d be happy to work with you as you weigh the pros and cons.