Owning a home is the quintessential American dream. Yet just over one-third of Millennials (people between 25 and 34 years old) own a home. Is this age bracket missing out, or are there some hidden benefits to renting? Consider the advantages of buying vs. renting a home to help you figure out what’s best for your situation.

Renting vs. Buying Pros and Cons

Buying Pros

  • Good investment opportunity
  • No landlord
  • Greater stability
  • Possible tax benefits (if you claim itemized deductions)
  • Freedom to update the home as you please

Buying Cons

  • Down payment may be needed
  • Potential to lose money if home values decline
  • Extra maintenance and repair expenses

Renting Pros

  • Low upfront costs
  • Freedom to move at your leisure
  • No maintenance or repair responsibilities
  • No property taxes

Renting Cons

  • The landlord can raise your rent or sell the property out from under you
  • Rent money doesn’t build equity
  • Extra pet rent may apply

The Cost of Renting vs. the Cost of Buying a Home

Different costs are associated with renting vs. buying a home. If you rent, you can expect to pay:

  • Security deposit (often equal to one month’s rent)
  • Rent (varies by market)
  • Renter’s insurance (lower cost than homeowner’s insurance)
  • Pet rent (if you have an animal in your home)

If you buy, the cost of ownership includes:

  • Down payments can vary between 5-20+ especially in urban “redevelopment” areas
  • Closing costs (about 3 percent of the purchase price)
  • Mortgage (includes principal and interest)
  • Property taxes (vary by location)
  • Homeowner’s Association fees (not always applicable)
  • Homeowner’s insurance (higher cost than renter’s insurance)
  • Private mortgage insurance (if you put down less than 20 percent on a conventional mortgage)
  • Home repairs, maintenance, and renovations (budget 1 percent of the home’s value per year)

Using a rent calculator helps you determine when the higher upfront cost of buying a home breaks even with the cost of renting. Depending on the market, the average break-even point is five years. This means if you buy a house and live there for at least five years, you can expect to save money compared to renting.

The Final Verdict

Clearly, renting vs. buying a home doesn’t have a clear-cut answer. It is a personal decision based on your current financial situation. However, if you plan to live in one place for a long time, it could be a wise investment. Plus, you’ll enjoy the chance to make the house your own as you invest in it personally, not just financially.

Are you ready to take the plunge? Vutech | Ruff, Corcoran Global Living is here to help. We are a top-producing team of real estate agents serving home buyers and sellers throughout the Columbus, Ohio neighborhood. We have over 60 years of combined experience in the real estate profession, enabling us to navigate the sometimes tedious, daunting, and complex process of buying or selling a home. To learn more about becoming a homeowner, please call 614-897-0618 or contact us online.