But buying a home doesnt pack the punch it once did.
Renting makes more sense for an increasing number of consumers.
Should You Rent or Buy?
Chris Zuppa/The Penny Hoarder.
Pros of Renting
Renting gets a bad rap.
For many people, though, renting simply makes more sense.
Here are some financial reasons renting might be a better choice for you.
Flexibility
In real estate, a longtime rule has applied to home selling.
The 5-year rule says you should stay in a home at least five years before selling it.
This rule isnt set in stone, though.
In that case, it makes sense to be a renter.
In that case, home ownership likely makes sense.
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Less Responsibility for Repairs or Maintenance
An emergency fund is essential for homeowners.
You never know when youll need to call a plumber or HVAC repair person.
Renting in a retirement community can also provide flexibility and access to amenities without the long-term commitment of homeownership.
Cons of Renting
Renting does have a couple of downsides.
For some, the lack of privacy that comes with apartment dwelling is a deal breaker.
But even if you rent a house on its own property, a couple of financial cons apply.
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Because most rental leases are one year, that means youre only locked in for 12 monthly rental payments.
Your landlordcan raise your rentat the end of every lease term.
Local laws might limit the amount of that increase, but not always.
That mortgage payment doesnt change, while rents tend to go up with inflation.
Weve definitely seen that happen in recent years.
Here are a couple.
Building Equity
A home is an investment.
Youll borrow money to purchase it, then pay monthly payments for the term of that loan.
It gives you a lot of financial flexibility over time.
Tax Deductions
As a homeowner, youll enjoy a nice perk at tax time.
Heres what you should probably know.
Upfront Costs
Often the biggest factor when deciding to rent or buy is finances.
But cash-strapped homebuyers can find alternatives to high down payments on conventional loans.
If youre not ready for that, the best advice is to start saving.
Ongoing Maintenance
The expenses dont end once youre in the house.
You may have homeowners association fees, which can cost hundreds of dollars each month.
Youll also need to take care of your home and tackle any emergencies that occur.
Thisrent vs buy calculatorcan help you decide.
Only you know the best living arrangement for you.
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Maybe youre scrambling after your car broke down.
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Stephanie Faris is a professional finance writer with more than a decade of experience.
