Maybe you already know what's right for you between renting or buying, 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:
| Costsswipe to compare | Renting | Buying |
|---|---|---|
| Initial Costs | Rental application fees, broker/agent fee (if applicable), security deposit, first-and sometimes last- month's rent, moving expenses | Earnest money, down payment, closing fees, moving expenses |
| Ongoing Costs | Rent, renter's insurance (if applicable), some utilities may be paid by the landlord | Mortgage, property taxes, homeowner's insurance, homeowner's association dues (HOA)/condo fees (if applicable), private mortgage insurance (if applicable) |
Insurance products are not insured by the FDIC, are not deposits, and may lose value.
Here's a snapshot of some benefits/features of renting and buying:
| Renting | Buying |
|---|---|
| Short-term flexibility | Long-term stability |
| Ability to move around, change location if needed - especially if new to an area | Build value over the long term |
| Don't have to worry about repairs and maintenance | Pride of ownership |
| Monthly costs are usually fixed for the term of the lease | Interest and property taxes are usually tax deductible - check with your tax advisor |
| Some utilities may be included in your rental payment | Fewer restrictions, such as freedom to make home updates, get a pet, and more |