When it comes time to move into your own home, you have two main options: rent or buy. You may wonder which choice is the most financially responsible, and the truth is, there is no single, one-size-fits-all answer. While many advise that it is always better to own than to pay rent, there are some scenarios that make renting the better option. Ultimately, it comes down to your particular circumstances. Let’s go through some of the top reasons for renting and buying so you can get a better idea.

Should I Rent or Buy?

Reasons to Rent

1. No Down Payment Needed

A down payment is a percentage of a loan that you put down up front when borrowing money. When you rent, you are not taking out a loan, so you do not need to pay a down payment. The down payment is often one of the biggest barriers prospective home buyers face, as it is a significant sum of cash to pay at one time. When you rent, you often need to pay a security deposit and one month’s rent up front, but this amounts to much less than a down payment would. If you are still at the start of your career and don’t yet have the funds to pay a down payment or maintain the other expenses of owning a home, renting can be a responsible option until you are in a more secure financial position.

2. Not Responsible For Most Maintenance and Repair Costs

Got a plumbing or HVAC issue? Did an appliance break down? Need the services of an exterminator? These home maintenance and repair costs are usually covered by your landlord when you are renting. Because you do not own the building or the appliances, you are not responsible for their care (unless you are the cause of the issue, perhaps). These costs can really add up for a homeowner, so you do save a nice amount of money by not having to pay for them when you rent.

3. No Commitment

Renting is a great idea when you first move to a community and are still getting the lay of the land. If you’re not sure you want to stay in the community long-term or if you don’t yet know which area of the neighborhood you want to live in, renting makes it easy to learn the ins and outs of the town or city before you make a more permanent decision and buy a home there. Of course, buying doesn’t have to be permanent either, but it is much easier to move from a rental place than it is to sell a home.

Reasons to Buy

1. Build Equity

When you buy a home, it is an investment. Each month when you pay your mortgage, you own a little bit more of your home. As property values and housing prices go up, you actually build equity in your home. If you sell your home 5-10 years after you bought it, you will likely have earned a nice amount of money over that time. On the other hand, when you rent, your monthly payment goes to someone else and you gain nothing of monetary value. If you are not sure if you are financially ready to buy a home, a financial planner can be a great resource to help you get a better understanding of your finances.

2. Set Down Roots

Your home is a place where you can set down roots and make it your own. Owning property brings a sense of security and pride that this little corner of the world belongs to you. You can raise a family there and build a life with the knowledge that this is your place. And even though there are town ordinances that may dictate how high or wide your house can be, for the most part, you can make your house into your home in whichever way pleases you. You can knock down walls, add extensions, change the landscaping, put in a pool, and whatever else you would like (in accordance with town laws) without dealing with a landlord, because it is YOUR home.

3. Eventually Live Mortgage-Free

Most mortgages last 30 years, and if you are in a good enough place financially, you can even take out a 15-year mortgage, instead. You can also convert your 30-year mortgage into a 15-year mortgage down the line. This means that, at some point, you will finish paying off your house and no longer have monthly mortgage payments. This is a huge financial achievement, and something that can never be achieved if you are renting. Renters will always have to pay rent, and they don’t reap any of the reward of home ownership and home worth over time.

To Rent or Buy in 2022

In 2022, housing prices are through the roof and interest rates are rising. Your interest rate is the amount in interest you pay the bank for giving you a loan; it is a percentage of your outstanding mortgage, so the higher the interest rate, the more you pay. These factors make it a difficult time to buy a home, but that doesn’t mean it isn’t still the right decision for you. At DeSantis, Kiefer, Shall, & Sarcone, our financial experts can help you decide whether it makes more sense to buy or rent a home, and how you can plan for homeownership either now or in the future.