Renting versus Buying

Purchasing a home is a big decision. Whether it’s purchasing to build equity and provide a nest egg for the future or renting to have low maintenance and the flexibility to move. Owning and renting each have their advantages, but what’s best for you depends on your circumstances. Here are some things to keep in mind as you weigh the benefits of renting against the benefits of owning
Owning a home is a financial commitment that requires you to plan ahead and reflect on where your life is headed. Before deciding whether to rent or buy, ask yourself what your budget is and if either choice would require you to stretch your finances. Write out your additional financial and savings goals to see how each choice might affect them. Make sure you still have enough money to save for retirement.

Maintenance costs for a house can be a lot. Someday your roof will wear out, and insurance policies don’t pay for general wear and tear. You’ll also spend money to mow the lawn, either by hiring a service or buying a mower. At various times, you may need to hire a plumber, a heating or cooling service and maybe an exterminator. Of course, that’s a good argument for buying a condominium, if you want something between buying and renting.” Tip by Amar Realtor – Campbell CA Real Estate Expert

With a condo, you own the property, but the condo association, which you pay dues to, is responsible for making sure the lawn is mowed and often making sure indoor repairs are taken care of such as plumbing. You have to think beyond how many housing expenses there are and ask yourself whether a mortgage lender is likely to give you good terms on a loan for a home. After all, the better the interest rate you can get, the less pricey your mortgage payment is going to be.

The first question to ask when it comes to renting or buying is, What can I afford? Depending on where you live and how long you plan to stay, additional costs like home maintenance, taxes, insurance, and more may point to renting as a smarter financial move—as long as you focus on other ways to build wealth.


The biggest myth about renting is that you’re throwing away money every month. This is not true. After all, you need a place to live, and that always costs money in one way or another. While it’s true that you aren’t building equity with monthly rent payments, not all of the costs of homeownership always go toward building equity. When you rent, you know exactly your housing costs each month. This amount is indicated on your lease so you can plan accordingly. In some cases, your landlord may also include other costs within that amount, such as utilities, storage, and homeowner association (HOA) fees if you live in a condominium.

Homeownership brings both tangible and intangible benefits. Not only do you have your own home, you can make decisions about the look and design of the space, but you also get a sense of stability and pride of ownership. Keep in mind, though, that changing your mind about where you are living can be very expensive since real estate. You may not be able to sell when you want. And even if you do, you may not get it at the price you want, especially if the housing market is down. Even if it’s up, there are significant transaction costs associated with selling your property.

Renting can be a very predictable expense. You know what your costs are upfront and can plan accordingly. Buying a home can be a very good investment. You may be able to build equity. But as with any investment, just how well your investment performs depends on a number of factors.

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