Maybe you already know what’s right for you, or maybe you’re trying to figure out the best option—either way, the more educated you are, the better informed you’ll be.
Renting may be an option if you:
- Plan to move around and don't want to be tied to one location
- Don't have the funds for a down payment and closing costs
- Can't afford the potential maintenance costs of owning (repairs, lawn care, etc.)
- Are saving for the future
Buying may be an option if you:
- Plan to stay in one location
- Want to build equity over the long-term
- Have funds for a down payment and closing costs
- Want the potential tax advantages (check with a tax advisor for details)
- Can afford the maintenance costs of owning (repairs, lawn care, etc.)
Here’s a snapshot of how renting and buying may differ.
- Rental application fees
- Broker/Agent fee (if applicable)
- Security deposit
- First—and sometimes last—month's rent
- Moving expenses
- Mortgage application fees
- Earnest money
- Down payment
- Closing fees
- Moving expenses
- Renter's insurance (if applicable)
- Some utilities may be paid by the landlord—be sure to ask
- Homeowner's insurance
- Homeowner's Association Dues (HOA)/Condo fees (if applicable)
- Private Mortgage Insurance (if applicable)
- Included usually as part of the monthly rent (though each property may vary); however, improvements or changes to the property are limited.
- Not included. Maintenance and any repairs are paid separately. However, some homes may include these expenses as part of the monthly HOA/condo fees.
- Pay local property taxes (either monthly as part of an escrow account or you pay directly on a semi-annual or annual basis); however, both mortgage interest and property taxes are usually tax deductible.
- Consult a tax advisor for complete details.
- Choose from 3-, 6-, 9- or 12-month terms (or month-to-month) giving you the flexibility to move/change locations.
- Usually the longer the term, the lower the monthly payment; however, there may be penalties if you leave or terminate the lease before the end of the term.
- Fixed payments for the term of the lease only.
- Own the home until you choose to sell or rent the property.
- HOA fees, property taxes and homeowner’s insurance typically increase over time—so be sure to plan for that in your budget.
- Short-term flexibility
- Ability to move around, change location if needed – especially if new to an area
- Don't have to worry about repairs and maintenance
- Monthly costs are usually fixed for the term of the loan
- Some utilities may be included in your rental payment
- Long-term stability
- Build value over the long term
- Pride of ownership
- Interest and property taxes are tax deductible—check with your tax advisor