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Renting or Buying: Advantages and Disadvantages

If you are considering buying a house, one of the first decisions you need to make is whether buying a house instead of renting one is the right direction for you. Since owning a home is the “American Dream”, many people simply assume that it’s always to their advantage to buy a home, and for most, it is. Take a moment to review the following lists to see how your situation fits in.

Renting
*  More fixed costs for the term of the lease
*  Not gaining equity, but not losing it either
*  When the lease is up, you can just move
*  There is generally less work in maintaining a home or apartment
*  Smaller amount of “up-front” cash
*  No matter what happens with the value of the home, you will never gain equity
*  Limited—or no—ability to personalize your living quarters
*  No tax advantage to renting. Your landlord gets any and all tax breaks that are available

Buying
*  Variable costs
*  Equity may go up, down, or stay stagnant
*  If you want to move, home generally must be sold
*  Work needs to be done by you—or paid for by you
*  Generally a larger initial investment—the downpayment
*  Over time, the mortgage balance decreases and equity builds, even if the value of the home does not increase
*  The ability to remodel and redecorate the home to match your needs and desires
*  There can be tax advantages attached to home ownership. Consult competant legal and/or accounting advice for details for your situation

This article courtesy of The Home Buyer’s Information Center, a complete guide to buying a home. 2002